M
Mike Jacoubowsky
Guest
"Sandy" <[email protected]> wrote in message
news:[email protected]...
| Dans le message de news:[email protected],
| Mike Jacoubowsky <[email protected]> a réfléchi, et puis a déclaré :
|
| >Are you certain that it was a "failure" that sales didn't hit the
| > minimum quota? Trek did, if I read it correctly, pay Greg the minimum
| > royalty as required in the contract.
|
| Yes, I'm reasonably certain. If you were, for example, a car salesman,
with
| a guarantee of $250 a week, and almost all customers were directed to
| someone else, would you consider that the employer was giving you a fair
| chance to earn your expected living? Secondly, does the car enterprise
| benefit by giving away money for low returns? Does it benefit from
| mothballing a brand name? I think we'd all like to know, but that is far
| from reasonable to hope to learn, as facts.
You're making at least two assumptions. First, that sales in Europe would
have been significant had Trek tried to really push LeMond. And second, that
Trek moved LeMond sales into Trek. Could be that neither is true. I've spent
time in France each July since 2000, and know the distributor & euro manager
quite well. France is *not* an easy place to sell bikes, at least not bikes
from "elsewhere." As I'm sure you're aware, the typical French bicycle shop
isn't well-schooled in the finer points of customer service, keeps difficult
hours, and has a very patronizing attitude towards both customers and
suppliers. Most bikes are sold by retail chains like Decathlon Sports and
Intersport, where, in a reversal of what we see in the US, customer service
and product selection is actually much better than at the local retailer.
Neither of the two distribution channels have been favorably-disposed to
US-based brands, for different reasons. The consumer, on the other hand, has
seemed more than willing to buy a Trek. On each of my visits I had many
locals admiring my bike; there is certainly no widespread animosity towards
American brands (nor, among "the people", American athletes either... the
French Press is another thing entirely).
Trek's had a very difficult time moving any of their bikes there; only very
recently are they seeing a small amount of success. The entire country of
France, for example, has been an account about the size of my two stores. If
Trek were "directing" sales away from LeMond and towards Trek... well, let's
just say that an intelligent but unschooled (in the ways of French bicycle
retail) person would probably choose a target number for LeMond sales that
wouldn't have been met by Trek itself.
Things could be very different elsewhere in Europe. In fact, I know they
are. Otherwise Trek & LeMond couldn't afford to be there at all. I chose
France as an example because that's the only country I know first-hand.
My point is simply that a number may have been chosen for the minimum sales
figure that someone knowing all the facts would have seen as very wishful
thinking, even with everything done right. A person without all the facts
would have thought that same number quite low. This is why I'm thinking Greg
may have wisely chosen structured his "royalty" to be more like a "fee" with
only a slight possibility that it (the minimum) would be exceeded, but yet a
guarantee of some reasonable amount of money.
But this is entirely conjecture on my part. I'm looking at incomplete
information and simply pointing out that things might not appear exactly as
they seem.
| > In that scenario, Greg simply felt that his name was
| > worth X dollars, period, and if Trek were to sell even more than
| > expected, he'd be further rewarded.
|
| If Trek wanted to keep a potential rivalry from erupting into a business
| feud, detrimental to both parties, perhaps Trek was willing to increase
the
| cost of keeping a competitor out of the game. Just a possibility,
although
| I can't suggest it is the likely one. If that were the case, and Greg
| agreed in principle, I bet he would not have settled at the level that was
| agreed. I think this is partially evidenced even in the stuff you have
| written.
I can't quite get my arms wrapped around what you're saying here. Plus I'm a
bit concerned about what I might have said that led you to believe something
I don't understand. :>)
| > That is a similar concept to business rents where, if sales exceed a
| > certain amount, you owe the landlord more.
|
| In the sense that _all_ license agreements foresee (at their optimistic
| origins) rising benefit levels, you are correct. However, when the object
| is not to see increased sales, thus royalties, it is irrelevant.
It is very difficult to construct a model in which Trek doesn't think
increased sales of LeMond would be a good thing. Corporate thinking at Trek
has *always* been "more brands/more models/more sizes/more colors/more
sales. Simplicity in presentation is not something they believe in. They
think they need a zillion offerings to try and snag every possible customer.
And to that end, they have multiple brands. LeMond was an integral part of
that strategy. They felt, and still feel, that there is a consumer who will
buy a LeMond who would not buy a Trek.
That is Trek thinking, not mine. I can go along with multiple lines with
clear product diffentiation, but I think Trek itself has too many offerings
and thus a diluted message. What *is* Trek's message? Bikes for everyone?
(In reality, Trek believes, and I think has proven to be true, that bikes
benefit greatly from massive product research & development efforts, and
that technology is the key to building a better bike, which costs a lot of
money... and of course, the bigger you are, the easier it is to execute that
strategy, to the detriment of smaller players who cannot afford to keep up).
In any event, the LeMond line has had great and selfish support from a
number of Trek employees in Waterloo. People who have fought hard for
resources and outspent Trek dramatically on a per-bike marketing & R&D
basis. You don't do that for a line that you don't believe has a future.
| I think the parties each know part of the truth and remain ignorant of
other
| elements. But it does bear noting that the Armstrong shareholding in
later
| years may weigh more heavily on the decisions Trek made, on balance. It's
| true that Armstrong, as shareholder, would benefit by increased Lemond
sales
| going to the bottom line, but if there were other motivations that
tempered
| the hunger for that specific profit, including the business judgment that
| supporting a minor line did not generate the returns that the promotional
| efforts would cost, that could also lead to the results Lemond complains
of
| in the papers.
I am told that the amount of Trek owned by Lance is quite small, even
miniscule. But it's been described in exactly those terms, which really
don't tell us much. But I think they do tell us enough to believe that even
a wildly-successful LeMond line isn't going to substantially contribute to
Lance's bottom line. One thing I am sure of though. Lance has nothing to do
with bottom-line decisions in Waterloo. I would have heard about that. Lance
did have a *huge* effect on product development, as far as pushing the
development of race bike technology. But I don't think even then he had any
sensitivity to cost or budget. He just wanted the best-possible machine to
ride (and was extraordinarily picky in some ways, and strangely
dispassionate in others... I think the engineers had a love/hate
relationship with him).
But forget Lance (which is hard to do, when he's mentioned so many times in
Greg's filing). One need only look at the LeMond product line and its
marketing to see that it wasn't old, it wasn't being neglected, it wasn't
getting a 2nd-best effort. Some of the most-creative product & marketing
have been found on the LeMond side. And frankly, it was always surprising to
me, each year, to see how many people were working on the LeMond side, in
marketing & product & graphics, compared to the Trek side. If LeMond had
1/10th the sales of Trek, it appeared they had 1/2 the staff. That's just
how it looked to me, from the outside. And, as I said earlier, the LeMond
folk fought for all the resources they could get (and were very good at it).
Maybe it was a "We're #2 but we try harder" type of thing going on. I just
can't believe that Greg could have visited Waterloo Wisconsin and not been
very impressed by their efforts.
| I'm reading you - hope you will continue the dialogue.
That might be tough. With RBR's plethora of intelligent, civil & rational
discussions to choose from... :>)
--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com
news:[email protected]...
| Dans le message de news:[email protected],
| Mike Jacoubowsky <[email protected]> a réfléchi, et puis a déclaré :
|
| >Are you certain that it was a "failure" that sales didn't hit the
| > minimum quota? Trek did, if I read it correctly, pay Greg the minimum
| > royalty as required in the contract.
|
| Yes, I'm reasonably certain. If you were, for example, a car salesman,
with
| a guarantee of $250 a week, and almost all customers were directed to
| someone else, would you consider that the employer was giving you a fair
| chance to earn your expected living? Secondly, does the car enterprise
| benefit by giving away money for low returns? Does it benefit from
| mothballing a brand name? I think we'd all like to know, but that is far
| from reasonable to hope to learn, as facts.
You're making at least two assumptions. First, that sales in Europe would
have been significant had Trek tried to really push LeMond. And second, that
Trek moved LeMond sales into Trek. Could be that neither is true. I've spent
time in France each July since 2000, and know the distributor & euro manager
quite well. France is *not* an easy place to sell bikes, at least not bikes
from "elsewhere." As I'm sure you're aware, the typical French bicycle shop
isn't well-schooled in the finer points of customer service, keeps difficult
hours, and has a very patronizing attitude towards both customers and
suppliers. Most bikes are sold by retail chains like Decathlon Sports and
Intersport, where, in a reversal of what we see in the US, customer service
and product selection is actually much better than at the local retailer.
Neither of the two distribution channels have been favorably-disposed to
US-based brands, for different reasons. The consumer, on the other hand, has
seemed more than willing to buy a Trek. On each of my visits I had many
locals admiring my bike; there is certainly no widespread animosity towards
American brands (nor, among "the people", American athletes either... the
French Press is another thing entirely).
Trek's had a very difficult time moving any of their bikes there; only very
recently are they seeing a small amount of success. The entire country of
France, for example, has been an account about the size of my two stores. If
Trek were "directing" sales away from LeMond and towards Trek... well, let's
just say that an intelligent but unschooled (in the ways of French bicycle
retail) person would probably choose a target number for LeMond sales that
wouldn't have been met by Trek itself.
Things could be very different elsewhere in Europe. In fact, I know they
are. Otherwise Trek & LeMond couldn't afford to be there at all. I chose
France as an example because that's the only country I know first-hand.
My point is simply that a number may have been chosen for the minimum sales
figure that someone knowing all the facts would have seen as very wishful
thinking, even with everything done right. A person without all the facts
would have thought that same number quite low. This is why I'm thinking Greg
may have wisely chosen structured his "royalty" to be more like a "fee" with
only a slight possibility that it (the minimum) would be exceeded, but yet a
guarantee of some reasonable amount of money.
But this is entirely conjecture on my part. I'm looking at incomplete
information and simply pointing out that things might not appear exactly as
they seem.
| > In that scenario, Greg simply felt that his name was
| > worth X dollars, period, and if Trek were to sell even more than
| > expected, he'd be further rewarded.
|
| If Trek wanted to keep a potential rivalry from erupting into a business
| feud, detrimental to both parties, perhaps Trek was willing to increase
the
| cost of keeping a competitor out of the game. Just a possibility,
although
| I can't suggest it is the likely one. If that were the case, and Greg
| agreed in principle, I bet he would not have settled at the level that was
| agreed. I think this is partially evidenced even in the stuff you have
| written.
I can't quite get my arms wrapped around what you're saying here. Plus I'm a
bit concerned about what I might have said that led you to believe something
I don't understand. :>)
| > That is a similar concept to business rents where, if sales exceed a
| > certain amount, you owe the landlord more.
|
| In the sense that _all_ license agreements foresee (at their optimistic
| origins) rising benefit levels, you are correct. However, when the object
| is not to see increased sales, thus royalties, it is irrelevant.
It is very difficult to construct a model in which Trek doesn't think
increased sales of LeMond would be a good thing. Corporate thinking at Trek
has *always* been "more brands/more models/more sizes/more colors/more
sales. Simplicity in presentation is not something they believe in. They
think they need a zillion offerings to try and snag every possible customer.
And to that end, they have multiple brands. LeMond was an integral part of
that strategy. They felt, and still feel, that there is a consumer who will
buy a LeMond who would not buy a Trek.
That is Trek thinking, not mine. I can go along with multiple lines with
clear product diffentiation, but I think Trek itself has too many offerings
and thus a diluted message. What *is* Trek's message? Bikes for everyone?
(In reality, Trek believes, and I think has proven to be true, that bikes
benefit greatly from massive product research & development efforts, and
that technology is the key to building a better bike, which costs a lot of
money... and of course, the bigger you are, the easier it is to execute that
strategy, to the detriment of smaller players who cannot afford to keep up).
In any event, the LeMond line has had great and selfish support from a
number of Trek employees in Waterloo. People who have fought hard for
resources and outspent Trek dramatically on a per-bike marketing & R&D
basis. You don't do that for a line that you don't believe has a future.
| I think the parties each know part of the truth and remain ignorant of
other
| elements. But it does bear noting that the Armstrong shareholding in
later
| years may weigh more heavily on the decisions Trek made, on balance. It's
| true that Armstrong, as shareholder, would benefit by increased Lemond
sales
| going to the bottom line, but if there were other motivations that
tempered
| the hunger for that specific profit, including the business judgment that
| supporting a minor line did not generate the returns that the promotional
| efforts would cost, that could also lead to the results Lemond complains
of
| in the papers.
I am told that the amount of Trek owned by Lance is quite small, even
miniscule. But it's been described in exactly those terms, which really
don't tell us much. But I think they do tell us enough to believe that even
a wildly-successful LeMond line isn't going to substantially contribute to
Lance's bottom line. One thing I am sure of though. Lance has nothing to do
with bottom-line decisions in Waterloo. I would have heard about that. Lance
did have a *huge* effect on product development, as far as pushing the
development of race bike technology. But I don't think even then he had any
sensitivity to cost or budget. He just wanted the best-possible machine to
ride (and was extraordinarily picky in some ways, and strangely
dispassionate in others... I think the engineers had a love/hate
relationship with him).
But forget Lance (which is hard to do, when he's mentioned so many times in
Greg's filing). One need only look at the LeMond product line and its
marketing to see that it wasn't old, it wasn't being neglected, it wasn't
getting a 2nd-best effort. Some of the most-creative product & marketing
have been found on the LeMond side. And frankly, it was always surprising to
me, each year, to see how many people were working on the LeMond side, in
marketing & product & graphics, compared to the Trek side. If LeMond had
1/10th the sales of Trek, it appeared they had 1/2 the staff. That's just
how it looked to me, from the outside. And, as I said earlier, the LeMond
folk fought for all the resources they could get (and were very good at it).
Maybe it was a "We're #2 but we try harder" type of thing going on. I just
can't believe that Greg could have visited Waterloo Wisconsin and not been
very impressed by their efforts.
| I'm reading you - hope you will continue the dialogue.
That might be tough. With RBR's plethora of intelligent, civil & rational
discussions to choose from... :>)
--Mike-- Chain Reaction Bicycles
www.ChainReactionBicycles.com