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Zero Motorcycles Seeks Reinvention as CEO, Founder Exit

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For electric motorcycle maker Zero Motorcycles, springtime is shaping up to be a season of change. The company announced today that CEO Gene Banman, who has led the startup since 2007, is retiring. This comes just about a month after Zero raised $17 million and saw co-founder Neal Saiki step down from his role as chief technology officer.

Founded in early 2006 in Santa Cruz, Calif., Zero builds street and dirt bikes that run on lithium-ion batteries and sell for about $10,000. By 2007 it had found some high-profile customers, including Google (s GOOG) founder Larry Page. The company is in the midst of a common phase in startup growth where new money comes in, old leadership exits, and seasoned executives step up to try and bring the company into the big leagues.

“It’s definitely a different company now,” Marketing VP Scot Harden said in an interview today. Investors have had a strategy “to make over the company for over a year now.” The overriding goal is to go from a niche electric bike startup to “a true, honest-to-god motorcycle company.” And that means building a team with “true, honest-to-god motorcycle experience.”

Chief Operating Officer Karl Wharton, who joined Zero in February after several years at Triumph Motorcycles, will take over direction of day-to-day operations while the company seeks a new CEO, a Zero spokesperson confirmed with us today. Although Banman will remain on the board of directors, he plans to “get some R&R and travel, and then do some part time work with non-profits,” according to Zero’s release.

Saiki started the company with his wife Lisa in their garage, having previously worked as an engineer for NASA and designed bike frames for Trek and Santa Cruz Bicycles. Banman, meanwhile, is one of many entrepreneurs, investors and executives who shifted gears from infotech to greentech over the last 5-10 years. (Check out our list of 25 who switched.) His background includes 15 years at Sun Microsystems, where he spent five years heading up Sun Microsystems, Japan. Later he became chief executive of the network firewall startup NetContinuum (acquired by Barracuda Networks in 2007). (See Saiki in our video clip below)

Both Banman and Saiki “were instrumental in convincing” private equity firm Invus Group to invest in Zero, Invus Managing Director Afalalo Guimaraes said in a statement on Tuesday. Invus became the company’s principal backer in 2008.

For 2011, said Harden, Zero is focused on “laying the foundation” for growth by establishing new engineering, manufacturing and marketing processes, and changing its approach to sales and distribution.

In the company’s early stages it “made sense” to use independent sales representatives, he said. But now Zero is working to establish distribution through “more traditional power sports dealers.” As part of that effort, it is “going through the process of getting licensed in every state,” and within 3-6 months Harden said Zero hopes to be ready for sales throughout the U.S. Next, the company plans to turn its attention to Europe.

Zero has sought to reinvent not only processes, but also the product itself. Previous models were basically “mountain bikes with electric motors in them. They lacked components that real motorcyclists would see right off the bat,” said Harden. Zero’s 2011 lineup includes five models: the Zero DS, Zero S, Zero XU, Zero MX and Zero X. Popular Mechanics reviewed the Zero DS and concluded that the company’s designs have “come a long way” in the last few years:

Their two-wheeled creations now feel less like glorified mountain bikes and more like motorcycles—well, perhaps junior motorcycles. They’ve increased battery capacity and reinforced suspension components, offering a product that’s more mature than it’s ever been.

At this point Zero is assembling about 30-40 bikes per week at its new Scotts Valley factory, which just a few weeks ago “was an empty warehouse,” said Harden. “We could easily do 60 to 70 a week once we get some rough edges smoothed out.” The company has about 70 employees, up from fewer than 50 around this time last year.

According to Pike Research, in a small market with seven or eight different manufacturers (including Brammo and Mission Motors), the bottom line for electric motorcycle manufacturers eyeing the U.S. market is whether they will prove “either profitable enough or specialized enough to be sustained over the next several years until demand grows to meet the growing supply.” So for all of Zero’s ambition, and its financial fuel for growth, it’s still an open question how much appetite Zero will be able to stoke for its electric motorcycles when the dust finally settles from its shakeup.