The warning label for radioactive substances (technically, the warning label for ionizing radiation) was born in 1946, at the UC Berkeley Radiation Laboratory, and the now iconic symbol began life a bit different from how we know it today, originally colored with a very hip magenta “trefoil” on a blue background.
The shape of the three-bladed trefoil is quite specific and purposeful – drawn with a central circle of radius R, an internal radius of 1.5R, and an external radius of 5R for the blades, which are separated from each other by 60° of empty space.
It’s shape is tightly defined because it is to noticeably and clearly warn you against the dangers of ionizing radiation, which at their very worst would cook you instantly like an egg, or in less worse conditions, still potentially cause life-changing mutations to your cells and DNA.
The yellow and black trefoil is supposed to be a literal warning (the IAEA and ISO adopted this new coloring in 2007) of course, but labeling something radioactive carries with it a metaphorical weight as well. And, it too demands a cautious interaction from the user.
In the motorcycle industry, we have our fair share of radioactive elements, though few come with a warning label. On Episode 45 of the Two Enthusiasts Podcast, you may have heard me refer to a motorcycle company as being radioactive. I thought it was worth spending some words on what that means in that context.
Radioactive by Identity
I can think of no brand that better exemplifies the abstract concept of being radioactive than Buell / Erik Buell Racing / EBR Motorcycles. The very fact that talking about the Buell story requires three vaguely similar company names supports the notion. This is a company with a sordid past.
From its inception at Harley-Davidson as the pariah sport bike brand, to its failed reboot as a racing team that also sold sport bikes, to its most recent flop post-receivership, in each instance Erik Buell has had overcome the baggage that comes with the company that bears his name, and each time, that task was too tall of a mountain to climb for the American upstart.
It should go without saying that any motorcycle company that has rebooted three times in a single decade is going to face skepticism in the marketplace, both with consumers and with dealers. And, each failure by the American sport bike brand adds a burden to the next, thus looping another albatross around Buell’s neck.
Now, the motorcycle industry is collectively holdings its breath, curious to see if anyone wants to take up the mantle of this failed brand for the fourth time around.
In many ways, I sincerely hope another investor does not appear, if for no other reason than to let this story have an ending, and thus finally be at rest…but too, the sadist in me secretly wishes for an encore performance to this ever-evolving train crash.
If there is ever another buyer, they will face harsh realities before they even get to the dirty business of making and selling motorcycles, which by itself is no easy task.
This will of course include the difficult job of convincing both consumers and dealers that this American brand is here to stay, and it’s hard to make that promise when three attempts before you have failed.
In each chapter of its story, the Buell brands have made classic mistakes that lead ultimately to their demise, but I would argue that the core concept is still sound: an American sport bike company. This might be why we hear murmurings of interested buyers, but there is one problem.
You cannot remove Erik Buell from the equation of a company that bears his name, and the Buell name positively glows with radioactivity. Everything that made the Buell brands successful is also what lead to their demise.
From the design innovations (I use the term loosely), to the focus on the sport segment, to the insatiable need to go racing – every one of these things is what defined Buell as something more than his competitors, and yet are also the reasons why he ultimately failed, time and time again.
As such, I would argue that it is easier to start a motorcycle company from scratch, than to try and capitalize on whatever brand recognition and loyalty still resonates with the Buell name.
It is hard to imagine why someone would want to tackle once again the puzzle that is EBR Motorcycles, but I have a feeling though too, we will have to test this hypothesis at least one more time.
Radioactive by Reputation
Contrast the Buell example with MV Agusta, another company that glows in the dark. But unlike Buell, MV Agusta’s name is perhaps its greatest asset. The iconic Italian brand is that: an iconic Italian brand, known for its beautiful motorcycles and rich heritage.
The modern day MV Agusta is of course embroiled in financial issue after financial issue, and even after Harley-Davidson wiped the slate clean for the Italian marque, the Castiglioni family faced difficulty finding financial backers.
We should all know the story about the failed marriage of MV Agusta and Mercedes-AMG, which has only lead to more financial uncertainty.
The MV Agusta name though has to deal with more than just its creditors, as it has to contend with the general perception of its machines being unreliable, its dealer network being too sparse and poorly trained, and of course its customers having to wait far too long for parts.
Despite the fact that Varese is producing a very strong lineup of motorcycles, lead now by a very mature and developed three-cylinder platform, alarm bells should sound in any rational person’s mind when considering the purchase of an MV Agusta. I say this not just as a journalist, but also as a potential buyer.
Those alarm bells are of course grounded in prudence, and the knowledge that those who have gone before me have suffered a fate usually reserved for the great transgressors of Greek mythology.
Why spend an eternity rolling a boulder up a hill, when one can simply buy another exquisite motorcycle? There is no shortage of them in the marketplace.
Even when MV Agusta rights the ship, and to some extent they already have, this issues will linger in the marketplace for far longer. It takes time to win back the trust of consumers, especially when that relationship has previously been so tumultuous and abusive.
Italian motorcycles have long had the reputation of being fickle and unreliable machines, a reputation well-earned by brands like Aprilia, Benelli, Ducati, Moto Guzzi, and MV Agusta during the post-WWII economy.
Some of these names have succeeded in moving past this nationalized stigma, while others through inaction have allowed this radioactivity to creep in as an unwelcomed attribute to their brand identity. In case you needed reminding, MV Agusta is in the latter group.
The important thing to note here, is this level of radioactivity doesn’t have to be grounded in reality. Perception alone will suffice. So, as long as the market perceives there to be dysfunction within the walls of Varese, the MV Agusta brand will suffer.
This creates an even tougher battle for Giovnani Castiglioni and his team, as they will have to do everything the hard way, and also do it better than what everyone else expects.
Where other brands of higher repute might be forgiven for the occasional misstep, for MV Agusta even the most casual of errors will be taken as a sign of continued failure.
It’s an unfair burden, to be sure, but it is also an onus that has been self-created by MV Agusta, and thus only they can relieve themselves of it.
Radioactive by Dependence
When it comes to Zero Motorcycles, there are two things that I have lost count of during my tenure at Asphalt & Rubber: 1) how many management teams that have cycled through this California-based startup’s doors, and 2) how many times they have taken me off their press list for writing unfavorable stories. I suspect these two numbers are related, but I can’t be certain.
The facts about Zero Motorcycles are stark though. In the nearly 12 years of being in business, the electric motorcycle company hasn’t cracked even 10,000 unit sales in total to customers, and depending on who you believe (and whether they are counting wholesale or retail figures) only 500 to 1,500 units were sold in sold in the most recent year by Zero.
Those are objectively meager results, especially when you consider that Zero Motorcycles will have blown through roughly $200 million in cash by the end of this year, almost all of which comes from a single investor: The Invus Group.
This private equity firm was the key investor in Weight Watchers, which made its benefactors (several extremely rich families in Europe) quite a bit of money during the 1980s.
The returns for Zero surely look less promising though, and by my math, and under the most favorable of conditions, the electric motorcycle manufacturer should start generating profits for Invus around the year 2044…but only after another $250 million is sunk into the company.
Basic financial concepts like sunk costs and the time value of money seemingly do not apply here, and I am at a loss for words when I try to explain why Invus continues to throw good money at bad money when it comes to Zero.
The only fathomable reason I can conjure is that it is easier to spin a $450 million “success in the making” than a material $200 million loss on the books. Denial probably helps too.
You have to give Invus credit for being a loyal financier though, they clearly see a future for Zero Motorcycles – at least, I hope they do. But, here too is where things start getting radioactive.
Zero continues to exist not because the market is responding to their products and buying them (aside from early adopters and brand loyalists), but instead the electric motorcycle company remains through the sheer force of will exhibited by one stubborn investor.
Just as Zero would not exist without Invus, Zero also has no other options beyond the private equity firm’s control. This isn’t a reciprocal relationship…it’s full-blown dependency.
There is no room now in Zero’s business model for outside investment. This means a single source of income, a single lifeline, and a single opinion on how to do business.
Clarity in a business operation can be a good thing, of course, as can a loyal investor. However, if there is one thing that 12 years of business can show us about Zero Motorcycles, it is that whatever the company has been doing up to this point in time, hasn’t been working. The $3 million or so that Invus pays out each month as an allowance to Zero proves this.
So without surprise, 2017 sees yet another changeup in Zero’s leadership team, with Samuel Paschel now taking over the CEO position from Richard Walker.
I sincerely hope that Paschel’s team has the vision and the leeway to make the course corrections necessary for this brand. If not, I look forward to once again being removed from the Zero’s media list. Wax on, wax off.
Radioactive by Personnel
What happens though when the business model is sound, the company is well-financed, and the market is eager for the product…but things somehow still go sideways? You can try and blame extraneous factors, but usually the buck stops with the people in charge.
You will often hear investors say that they would take a B- business idea from an A+ business team over the inverse.
I am supremely of the belief that companies like Skully and Mission Motorcycles failed not because of what was in their business plan, but instead because of their weak leadership.
Of course, when you see the allegations in court documents or reliable industry chatter that a company’s founding team used its investors’ money like a personal piggy bank, or the company’s entire business model was built from smoke and mirrors, the position is only reinforced further.
But what happens to these CEOs after their companies collapse like a dying star? Well, like the good neutron stars that they become, they become beacons of spewing radiation. They kill whatever business idea comes within their range, and they contaminate good ideas with their mere presence.
I don’t believe in karma, but I do believe that reputations eventually come home to roost. And like with MV Agusta’s challenge, this radiation label doesn’t have to be grounded in truth or reality – perception is enough to do damage here. Google sees all, which means your successes and failures are indexable and searchable…forever.
I doubt we will ever see these failed management teams in the motorcycle industry again, though they might have limited success fooling those in other industries…for a limited amount of time.
Just as businesses have to mind their brand, business people too have personal brands they have to manage and be mindful of, lest they take on the warm glow of radioactivity
Getting Dosed
I have been thinking a great deal lately about failure. Why does a certain company close its doors? And, how did that failure come to be? Maybe more importantly, what are the repercussions of that failure?
Maybe it is a morbid curiosity, but there is a great deal of knowledge to be gained from understanding the utter collapse of a business.
Motorcycling is in an interesting place in time right now, with businesses throughout the motorcycle industry having to come to terms with how to operate in not only a drastically different economic climate than before, but also with our growth depending on a new generations of riders that have distinctly different tastes and priorities from their predecessors.
Some brands will struggle with this adaptation, while others will succeed. And then there are those on the farther end of the learning curve, who will have to overcome their radioactive glows…if that’s even possible.
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