Longtime Slowtwitch readers will remember from previous OpEd pieces––and what's written herein is just my opinion as well––that I don't like bullies. I didn't like them then and I still don't, whether they're singular persons, governing bodies, or large corporations such as Trek.

Were you a subscriber to bicycle industry publications, your next months' issues would be full of this story. Consumer magazines will most likely not mention it at all. They are fain to risk losing current or future ads. But Trek doesn't advertise here, and our tepid reviews of its tri bikes haven't enhanced our prognosis for a deal in the future. After today we can predict that our prospects will fade further.

If you happen to live anywhere in the San Francisco Bay area, the fact that you read Slowtwitch is enough to ensure that you're familiar with the Start to Finish chain of bicycle stores––a seven-shop conglomerate that eight days ago became, with appalling suddenness, retail history.

Trek Bicycle Company backed seven trucks up to the seven stores, I’m told by a manager I know at Start to Finish, and removed the inventories en toto in response to a debt owed.

I have no problem with a manufacturer repossessing its merchandise. I owned a bicycle manufacturing company, and we collateralized our debt with retailers with our own inventory. This is common practice. Pay the bill or send the stuff back. If you don't return it, we'll come pick it up.

But that does not precisely describe the actions Trek has apparently taken.

Some history: Start to Finish was once the darling of the bike retail world. It quickly grew to a 10-store chain and was one of Trek's biggest retailers. But, as has been the case many times in the last generation or two, big, fast-growing bike stores get into debt problems. Such was the case with Start to Finish, and several years ago Trek actually took equity in the chain to help satisfy its debt.

A hue and cry from its dealers nationwide––and particularly those in the Bay Area––preceded Trek's eventual divestiture of that ownership.

Trek sold the stores (eventually reduced to seven of the better performers). This time, though, Trek took special––perhaps even prudent––steps to make sure it wasn't going to get burned. First, Start to Finish appears to have acted almost as a company store, at least as regards those items Trek sold and sells. No Cannondale, or Specialized, or Raleigh, or Schwinn, or GT, according to my manager friend. Trek was the flagship line, which guaranteed that if bikes flew out the doors of Start to Finish, they'd usually say "Trek" on the headbadge.

Trek also appears to have something that neither I, nor anybody else I've talked to among the longtime vendors I know, have ever heard of, at least in the bike biz. It seems to have collateralized its current and future debt with Start to Finish with all the inventory, not just its own inventory. That means all the inventory, paid for or not, including that of its smaller competitors. (Remember, Trek's bigger competitors weren't sold at Start to Finish stores.) So, if you were, say, Cervelo, and Start to Finish owed you deep in the five figures––a huge sum to a small company like Cervelo––Trek could take all those Cervelos and sell them at auction, keeping all the money until its own debt was satisfied.

This is precisely what Trek took the first step in doing last Monday. None of the vendors with whom I spoke were aware that Trek was owed a large sum of money, that such a deal was in place putting into jeopardy all other vendors' money, and that Trek's trucks were about to back up to each of seven Start to Finish doors.

Yes, Cervelo was owed an awful lot of money by Start to Finish. Several other tri-specific companies in the bike market also report taking a big hit.

In Trek's defense, what it is doing appears to me to be perfectly legal (although there may be some who challenge that). Furthermore, there were probably ways to divine knowledge of at least the broad strokes of Trek's deal with Start to Finish. A Dunn & Bradstreet report on the bike store chain probably would've shown a blanket UCC filing, a clue that Trek was taking the same position characteristically reserved for banks.

The fact remains, though, that no vendor I spoke to thought another vendor would ever take everybody's stuff––especially unpaid-for merchandise––and keep title to it.

I talked to Trek's attorney handling this matter. "Let us say," I asked him, "that I was a helmet maker, and $100,000 worth of my helmets sat in Start to Finish stores, with only half of those helmets paid for. Would you allow me to at least have back those of my helmets for which I was owed?"

"No," was the answer. "Trek would exercise its rights, and sell the inventories through a private or public sale. Any money that was left over after the debt was satisfied would go back to Start to Finish."

Forget the fact that people close to Start to Finish with whom I spoke think that Trek's deal was bad for the chain's new owner, and that eventual default was predictable. Forget that Start to Finish has been––or should have been––a money machine for Trek during its years operating as what was not unlike a factory outlet for Trek. Forget that Trek had a fallback plan which few knew about––that it could take all the helmets, apparel, floor pumps, carbon wheels, kiddie trailers, components, shoes, and pedals made by everybody else (whether paid for or not) to satisfy its outstanding debt. Never mind that this nets out as an elegant way to lessen or erase your own loss––at the expense of a small competitor––and at the same time put that same up-and-comer into dire straits.

What bugs me is that Trek's action will quite possibly damage key players in the sport of triathlon—the industry I'm in—and the company will do so without paying much penalty at the retail cash register. Trek is the hero of many in retail—consumers, too—because of how well it handles issues such as warranty returns. It deserves the huzzahs. When I owned and ran Quintana Roo, my company was likewise lauded. It would be silly, though, to be deceived about how I acted, and how Trek now acts. I wanted to be the king of warranty not because I was a nice guy, but because it was good business. Trek will be lauded and defended by shops and users because they confuse having shrewd tactics with having warm hearts.

Triathletes ought to know about the difficulty in which Trek is putting some triathlon vendors––the very companies that sponsor races and athletes, and generate new and better technologies. If Trek puts these companies under stress by making good product and selling at good prices, no problem. But it ought not to damage companies with a tactic like this.

There are yet ways for Trek to do (what I feel is the) right thing, and to even come out looking like a champion to the industry, instead of looking like a bully, which is what it resembles to me. I'd be more than happy to give Trek space here to defend its practice, or to explain how it has changed course. (I did contact Trek's lawyer yesterday, and his response, after seeing a draft of this OpEd was, "Trek Bicycle Corporation does not have any comments regarding the article you intend to publish.")

Funny thing. About a half-hour after I finished working on this piece yesterday, a fellow emailed me about purchasing a road race bike in the $2000 range. He wanted my advice. The first thing that came to mind was a Trek OCLV, and I told him so. What great bikes Trek makes! But if I was that potential customer––knowing what I know about Trek and Start to Finish––I'd buy a Kestrel Talon instead. Trek exhibits such good judgement in its manufacturing operations. Why mess that up with ethical lapses like this?