Ep 523: UPDATE: Revel Bikes’ Founder Buys Back Brand After Sudden PE Shutdown – The Story Behind the Re-acquistion!

0:00Adam Miller:Rebel Bikes is back under founder ownership. Talk about what's changed. They ran things differently than I would have hoped they would have. Financial performance declined, things got tough, and they decided to pull funding and close the company. When I got that call, I decided to buy the company back. It was pretty wild, and I still don't know that I understand fully what was going on there. The bank doesn't care that I was the founder. Totally fine. Bank cares about money. That's their job. But I had to kind of finagle a deal of like, well, how do I make this happen and beat out all these other people that are interested in the company?

0:31I was able to work with the bank and say, hey, I'll write you a check tomorrow. The company closing affected so many people in a bad way. Now that I feel like I got fortunate enough to be able to be back in this position, I want to really make sure we do things the best way possible.

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1:56Adam Miller:Welcome to D2C Podcast. Today we have a very special episode. It's actually a quick update from a podcast that we released maybe a couple weeks ago by the time this comes out with a really important update. We recorded this conversation with Adam Miller, who recently sold his company Revel Bikes, which is a bootstrapped high-end mountain bike brand to a private equity firm. The episode you heard a couple weeks ago was a deep dive into how he built that business from the ground up using home equity lines to fund inventory, launching with just$96 in paid media before he scaled globally and then exited.

2:29Adam Miller:But there's a new chapter. Just this past week, Adam bought the company back. That's right. Rebel Bikes is back under founder ownership. It's not every day that a founder sells their business and then decides to return to take the reins again. So we thought it would be a great idea just to catch back up, talk about this story a little bit. So welcome to the DTC podcast. Welcome back. This is the first time we've ever done a double tap so close to the original episode, but you were saying there were some things towards the end of that episode where we were talking about your exit to PE that just didn't quite ring the way you wanted to, and you've come to correct the story.

3:03Adam Miller:How are you doing? I'm doing good. Thanks for having me back so quickly. I appreciate the opportunity to be back. Recap the exit portion of your story and then talk about what's changed. Yeah, so I exited the company I started, Rebel Bikes. I exited at the end of 2021, and then I stayed on working for the private equity firm that bought my company for a couple of years after that. I hired a CEO in 2023 and then stepped away fully from the company a few months after that, early 2024, I stepped away from the company. So when we were recording the podcast the last time, great conversation about how things got started, how we bootstrapped the company, how we launched the brand.

3:46And then we started talking about how I sold the company. And at the time, this was a few months ago, I was still kind of in my, oh, I sold the company. I fully left a year, year and a half ago and, you know, figuring out what to do next. And just a few weeks after we recorded that podcast, I found out the day before the public found out, I found out that the company that I started was closing its doors. The private equity firm, I guess they ran things differently than I would have hoped they would have. And financial performance declined and things got tough. And they decided to pull funding and close the company.

4:23So when I got that call saying that they were closing, I decided to buy the company back. And after a few crazy weeks of all of that craziness, I'm very pleased to say it did work out. And I now own my company again.

4:39Adam Miller:Amazing. So walk me through that process. Was it just like, was it because they were putting it down, it became relatively easy for you to pick it back up? Yeah, it was pretty wild. And I still don't know that I understand fully what was going on there. Because it was just crazy. When we sold the business in 2021, things were going really well. At the time, the brand was fantastic. Financial performance was really great. Profitability was great. but we were still always looking for cash. So I decided to sell the business because I wanted more expertise. We were growing faster than I ever thought the business would grow.

5:15So I wanted more expertise for how to scale a business. I had never managed a company that size or thought I would be managing a company that size. So I wanted expertise and I wanted capital. My home equity lines of credit or my handful of investors that I had were not going to be able to continue to fund the business to grow at the rate it was growing. So I sold the company. It went great. It made my investors at the time very happy. Everything went well. And then the private equity firm, they had a much more, just kind of a different approach of how to run the business.

5:47Adam Miller:When you say different, you mean like more hand, because with founder, you're passionate, you're really hands-on, you know that business inside and out. Was it just more of like a hands-off kind of approach that just didn't end up working? It was a little bit of a lot of things that didn't quite jive with me. It was a reason And I left the company, you know, I didn't, when I sold the business, I didn't think I would just leave. But I did have some hard times with kind of some of the, some of the decisions that were made. It got really inefficient in the sense of building inventory, changing how we built and assembled bikes.

6:17The cash needs that were required to support that business model were huge. It was a model that looked better on paper, but it allowed for like way less creativity and being nimble and whatnot. There was more bikes and boxes and inventory and ultimately borrowing more money to pay for more inventory is what got the company into a bit of trouble. And then just focusing on, it was just more kind of corporate and bureaucratic and less sort of startup scrappy, which even though we were a successful business, we were still operating like a startup and still being quite scrappy. And so they just sort of just got very inefficient, hired a lot of people, hired a lot of expensive people.

6:55And it wasn't always kind of the right areas to focus on, in my opinion. But I still thought, okay, they're doing fine. They're doing great. You know, I'll sit back and I'm proud of the business I started. I didn't think they'd close the doors through it, through really through a type of a bankruptcy. see.

7:12Adam Miller:So, and from their perspective, I guess, with the amount of deals and the size of deals they have in place, something like this might be more of a rounding error, or it's sort of like they're, they're able to just say, okay, let's take this off the books. It's a drain on our talent or whatever. Whereas for you, it's your baby. A hundred percent. Yep. And that sort of thing happens a lot in private equity. You know, you invest in X number of deals and you plan for some to do really well and some to do okay and some to not do well. And when this one wasn't doing well, they just said, yeah, we'll just, we'll close it.

7:39But with that, it's, you know, something I put so many years in, but so many other people around me, so many of the employees that have been here since the beginning put, you know, years and years and tons of effort and sleeping in camper vans at trade shows and, you know, all sorts of stuff. So to close the company was just, was just terrible. And not to mention, you know, tens of thousands of customers around the world that owned the product, that loved the bikes, that, you know, had bought a product with a lifetime warranty, you know, just, there's a lot of passion involved. And so when they decided to close it.

8:10It's just, it's just, you know, it's, it's horribly sad for any, for any company to go through that.

8:14Adam Miller:And bikes just have such a special place. Like every bike I've had, I can remember the bike. I actually owned a bike brand recently that was like a defunct brand, but people would stop me and be like, Oh, you got one of those? Like, wow. I haven't seen one of those in a while. Like there's a real cult following about bike brands specifically too, right? Oh, super cult following. And there's like an outsized, you know, people care a lot because you do cool stuff with your bike, you take it on cool adventures. And so like, yeah, there's a lot of passion involved from from the customer base. So I mean, when, so I kind of heard rumblings that the company was going through financial trouble about a week before I was actually like, I was in I was in Papua New Guinea, like hiking, I was in like the most remote part of the world I've ever been to, and got some cell service and got a few text messages from people in the finance world that were like, Hey, it sounds like there's some issues going on at your old company.

9:03And I've been out of it and I purposely tried to really stay out of everything and not think about it much uh easier said than done um and then I got I got back and I got a call on let's see it was a Wednesday night I got a call from the the CEO of the company that I you know I hadn't heard from the private equity group or the CEO in in many months I got a call and he said I'm really sorry the company's closing tomorrow and then the next day uh press release went out that the rebel bikes is closing its doors. And I mean, I was like, I was devastated. And then the number of calls and messages I got from people, people I hadn't heard from in years, maybe someone who bought a bike, you know, back when we first launched, like people were reaching out and it was like, it was wildly emotional.

9:44It was a really bizarre rollercoaster of feelings and just like devastation. I mean, it was just like, awful to hear that.

9:52Adam Miller:Losing it all over again, right? Because you had already sold it and kind of divested yourself from it a little bit in your personality. Then you quit. So that was a second death. and then the third of it actually closing the door is this finality. That's a perfect way of putting it. Exactly. And, you know, after being away from the company for a year and being really proud of it, but, you know, obviously I also missed it a lot. It was a huge part of me. It was a way that I was able to, you know, meet so many cool people. I was really proud of what we did and it was a great, it was just so many good things came from that company.

10:21So closing it was, in my mind, was just like not an option, but that's what they did. So basically they defaulted on a line of credit. They owed JP Morgan a big chunk of money and they defaulted on that loan and the bank foreclosed and took the assets. So I called the bank and offered to buy the company from the bank. What was a little crazy is they got, I guess they'd been trying to sell the company for a few weeks before that, knowing things weren't going to quite pan out how they hoped. and then uh when the news went public i mean it kind of took over the bike media like for a few days every single publication all over the world was only talking about this because it's like it's big news um and the bank got like over 100 offers from people to buy the company and i found out that a lot of them were like you know maybe a lot of them weren't super real um but a lot of them were like private equity companies that do uh company liquidations and then a lot of them were like foreign owned and some us owned, um, private equity firms that owned other bike related brands or components or distribution or something.

11:25And likely what they would have done is bought, you know, bought the company for the brand name, put it on their own products, shut things down here and rebuilt it or, you know, anything like that, which is all totally like, that's all super viable business. I totally understand it. But for me, I was like, man, this, I don't want to see my company go that way. So I, um, I was able to work with the bank and say, hey, I'll write you a check tomorrow. I don't need to do due diligence. I've been out of the business for a while. I know things probably aren't great or else they wouldn't have closed their doors, but let's figure out how to make this happen.

11:59And so then I was able to do that. It's funny, the bank doesn't care that I was the founder or whatever, which is, again, totally fine. Bank cares about money. That's their job. It's all good. But I had to kind of finagle a deal of like, well, how do I make this happen and beat out all these other people that are interested in the company. And I was able to do that just by moving really quickly. There was an article nine transaction, which is a type of a kind of bankruptcy sort of fast tracked bankruptcy sort of a thing. And there's this like 10 day public notice and then a one hour auction period.

12:30And it was like down to the wire, like this auction was from noon to 1pm. And I was sitting at the bank with funds ready to wire, waiting on a signature at 1257. And it was like, I was just sitting there like hadn't slept in a few days. I was like, this whole thing is just like nuts. I'd love to never ever learn about or go through any type of a business process like that. Again, luckily, I was on the side of being able to buy it and bring the company back. But it's not a fun situation dealing with people who work through like companies closing all day long. So crazy, crazy few hours.

13:01Adam Miller:I don't know what you can disclose. I know you haven't talked we haven't talked purchase price or anything like that. I don't know if that's public. But like, give me an idea of like the how much you were able to acquire it for versus what it originally sold for? Like, I don't know, as a percentage, can you say that? Yeah, I mean, I guess I do have some some non disclosures on specific numbers, but it was it was literally pennies, literally pennies on the dollar. I think about the we were talking about the Dave Portnoy example of Barstool Sports getting sold back to him for a dollar just because I think in that case, it was because the person The acquirer ended up being too sticky of a property because of gambling rules and laws like that.

13:39Adam Miller:But it's pretty amazing when this happens. What I want to ask is, what were you doing in the intervening period? You were in Papua New Guinea. You had gone into the jungles. Did you work on anything during that period? And how did you feel during the parts where you didn't have this mission that you kind of had for the past 10 years? Yeah, totally. I mean, it was a great time to gain more mental clarity, figure out what's valuable, what I care about, all that good stuff. Because I've been so in the business, like I'm sure so many people here, you get so focused on it. So I sold it and I left the company and that was really, really nice for a few months.

14:14And then I was kind of like ready for what's next. I started working on a few things, did some consulting for some other businesses. I kind of kept on coming back to bikes, even though I sort of thought I might try something different. but it's fun to kind of apply the, the, you know, combining business and bike. Something I care about is, is, is just really fun. So I kept coming back to like, well, that would be really cool to get back into the bike world. And I actually ended up like, I bought like 20 different domain names for my next bike company over, over the last few months. I had, I was under non, non-compete, so I couldn't quite jump in, which was fine.

14:47It was good to take some time off, but yeah, I was traveling a bunch. I went to Papua New Guinea on like a business founder trip with some great friends and we were hiking around. We were literally like camping with this like tribe in the middle of nowhere. Papua New Guinea. It was like a very unique trip. We were like on this hike and hiked up and I turned my phone on, which my phone is off for most of that trip. And like all these messages popped in from no, from no one at the company or the private equity firm, but from kind of other people within the industry or finance world. And, and, you know, they're like, yeah, there's something going on.

15:19And so then it was kind of really great. I was with other DTC founder company people that are all friends that we all talk about a lot of business stuff. And I was like, whoa, this is coming up. I wonder what might happen. And then got back to Australia, hopped on some phone calls, found out the next day, you know, truly that the company was going to close. And then it was kind of full steam ahead. But it was nice to have that period of time where I wasn't in it to realize how badly I want to get back to something like this. So then I guess, you know, as horrible as it was for the business to close, it really was an opportunity that I feel really, really grateful that it worked out.

15:53So now I feel like I got a chance to do this again and do it the right way for the long haul.

15:59Adam Miller:Now, what's different? What has, because when you were looking to sell, you needed more capital to grow. We were looking for expertise. Like what's changed in round two of Revel? Yeah. I mean, a huge thing just overall is to, is to focus on being a little bit smaller, uh, for, for, for a longer period of time. Um, I don't have the same, like grow at all costs mentality at all. Like I want to be in this for the long haul. I don't plan on selling the business again. Um, you know, before it was kind of, I didn't even really know there were other options. I was like, Oh yeah, you start a business and then, and then you sell it.

16:29And like, now it's like, no, I want to grow this for like, I've, I feel so lucky to be back here making bikes and getting to travel around the world to sell bikes. Like it's kind of a dream job. So like, I don't want to sell it again. Um, but I want to build it to be a very sustainable, successful company that makes the absolute best bikes. And I won't be taking on, you know, investors that want to have like a quick exit or anything like that. So it kind of takes the pressure off. We can run it how it should be run. But a really cool thing was the company right before they closed, which I realized they kind of, they kind of made this big announcement and as a last ditch effort to try to sell the business or something, um, they launched three new bikes and they were all three new bikes that the company has a total product line of like seven, seven bikes, but these were kind of three of the main ones.

17:12They were all projects that I started back in 2021 and 2022. And then the team got them to the finish line and they did a phenomenal job. One thing, the private equity firm did kind of keep funding really great product development that realistically sort of set the company up, up a level. So I was able to acquire the company with three bikes that I wanted to make that are ready to go that we're shipping right now. And that's like huge, like what a, what an amazing feeling. So we did change immediately. We changed several things. So one, the company's a whole lot smaller just from a staff and overhead perspective.

17:44And then we became really solely a D2C brand. So we were doing kind of a hybrid model selling through retailers. I should say they were doing a hybrid model. The new version now, we adjusted all of our pricing 25 to 35 % lower, which gives customers a much more reasonably priced bike. But then we kind of have this premium D2C model. So we started doing meta ads two weeks ago. We're re-platforming our website to Shopify. We're kind of modernizing everything that realistically, even when I had started it was already sort of outdated. So sort of modernizing everything to be a real proper D2C brand, making the bikes who want to ride.

18:22Music to my ears, more ads.

18:24Adam Miller:More meta ads. You're going to get ads now. As an agency, anytime anyone's investing heavily into ads, I love to hear it. Well, that's super cool. Was there any detriment to the way this went down? Like you said, it was sort of bad for the business when it closed. Was there anything that you had to overcome there? Or was it just more publicity? More people had all of a sudden heard of Revel, and then you were able to correct that they didn't close. Like, was there any detriment to the business going through this? Yeah, there was a lot less than I thought. Certainly, we have more work to do on kind of letting the world know that Revel Bikes is back.

18:56You know, like bad news travels faster than good news generally. but so many people thought along so much and absolutely the brand got more publicity. And over the last, we've been really, since it's been a few weeks of like actually operating the business and the new entity, new sales model, new D2C focus, new everything. We've had like three and a half weeks of Apple actual operations at the time of this conversation. And sales numbers have been better than they have for apparently like the previous six to nine months. and we've been barely like, we're just being reactive right now. I'm just like, what, you know, where do we need to hire?

19:32Who are we going to hire? Or we're going to keep it kind of small. So it's, it's honestly, couldn't be like a better feeling in that sense of like, okay, customers are excited. They're happy. They're glad we're back. People know the bikes are great. The brain is a good image, but obviously a company going through a bankruptcy and closing and then coming back is like tons of turmoil. So at the same time that things are going well, I definitely feel they need to work on selling that story and let people know like, Hey, yeah, we're here. We're here for the long haul. Like, you know, buy a bike. You can call us up in five years if you need a spare part or what, you know, any, anything like that.

20:02Adam Miller:So, and then you didn't do this on purpose. This is like, you didn't do it this way on purpose, but it's worked out really well, I guess. Is there anything that you do differently about this process? Uh, if you were doing, cause you kind of would want to sell it and then buy it back. Like, is there anything you'd do differently about this process? Man, I've, I've stayed awake at night thinking about that a lot the last few weeks, I feel so overly like fortunate to be in this situation with, with the idea that, you know, the company closing and, you know, that's just, just terrible. That affected so many people in a bad way.