Tracy these people are here because they care. Lemonis . The entire tumbleweed business will collapse. Do you know what fercockt means . My name is marcus lemonis, and i risk my own money to save struggling businesses. Were not gonna wake up every morning wondering if we have a job. Were gonna wake up every morning wondering how many jobs we have to do. Its not always pretty. Everythings gonna change. Everything. But i do it to save jobs, and i do it to make money. This. Lets go to work. Is the profit. In 2012, Steve Weissmann took over tumbleweed tiny house company. Steve how are sales going . Lemonis . Now americas top manufacturer of mobile tiny homes. Tracy this is our roanoke model. Lemonis he had little experience building homes. Still, he managed to grow the company from five people working out of a garage to 70 people working out of a 20,000squarefoot facility. Tracy we have hundreds and hundreds of floor plans. Lemonis and today, sales exceed 6 million per year. However, as the company has grown, so have the operating costs. Tracy if i do not get my windows ordered, it is gonna really kill us. Lemonis desperate to keep the lights on and expand, steve turned to unconventional loans and credit cards. Now, with over 1 million of debt, tumbleweed is on the verge of bankruptcy. Steve the company is in jeopardy. Lemonis with my ownership in camping world, ive been in the rv space for over a decade, and i feel that investing in tumbleweed would allow me to make a huge splash in the tinyhome market. Pat yes, sir. How may i assist you today . Lemonis hi, there. Pat welcome to tumbleweed. Lemonis how are you . Im marcus. Pat oh, marcus. So wonderful to meet you. Lemonis nice to meet you. Steve hey. Lemonis im marcus. Steve im steve. Lemonis steve, nice to meet you. Steve nice to meet you. Its so surreal, actually, meeting you facetoface. Lemonis were here. Lets do it. So, this is your business. Steve this is it. Lemonis what prompted you to get into this . Steve im a minimalist by trade. Lemonis do you live in a tiny home . Steve no. I live in a regular house now. Ive got a family and kids. I actually live in sonoma and in colorado. Lemonis what happened to, i want to be a minimalist . Steve i still am a minimalist. Lemonis yeah. What did you do before this . Steve i was a restaurateur. I really dont have much experience in manufacturing. I can manufacture a burger. Lemonis okay. Can you show me a few models . Steve so, we have cypress, the farallon alta, the elm 26 equator, and the roanoke. Lemonis i mean, its like a log cabin. Steve yeah. Lemonis but its movable. Steve yes. They can pick their floor finish, they can pick their roof and window colors. People really want to get into these and customize them. Lemonis so, what is your typical price for an average unit sold here . Steve right now, 80,000. Lemonis and whats the Maximum Capacity that the factory can actually produce . Steve were currently producing anywhere from eight to ten a month. And we have about three to four to five month backlog at any given time. Lemonis three to five months . Steve yes. In the beginning, when we started off, we were building about two to three a month, and we started selling more, and so our backlog grew and grew and grew and grew. Lemonis uhhuh. Steve well, were gonna go out in the shop and take a look. Lemonis well, show me the shop. Steve yeah, all right. Lemonis whats fun about tiny homes is that, although theyre mobile, they typically stay more stationary, and the craftsmanship really matters. When i look at this particular product and i look at the materials that they use and the work thats going into them, the work is unparalleled. I have never seen anything with this high of quality. Start to finish, how long will it take . Steve it should take 16 days. This ones probably gonna take us 21, maybe 22. Lemonis well, how do you not know . Steve were gonna know when its done. Lemonis no, no, no, no. How are you pricing the unit before you know how long its gonna take . Steve we have a lot of estimates on our pricing. People really want to customize these a lot, so we get curveballs all the time for things that weve never done before. Lemonis like . Steve like folding porches. We had no idea what that was gonna entail. Lemonis what did it cost you to make . Dont say you dont know. Steve our costs of labor and materials on one of these units is around 60 . Lemonis so, your margins are 40 . Steve well, okay, so, besides the cost of goods, theres probably about 10 additional costs in design, servicing, labor, sales. Lemonis so, your margins are 30 . Steve 30 . Lemonis do you think those are good . Steve i dont know if theyre good or bad. Lemonis the more i dig, the less i think he knows. I think any Business Owners lack of research will ultimately lead to bad decisionmaking. You cant run a business that way. Whats up, guys . Brian hello. Lemonis how are you . Brian good. Lemonis im marcus. Brian im brian. Lemonis nice to meet you, brian. Mason mason. Lemonis mason, nice to meet you. Where did you learn how to do this . Brian military. Lemonis you were in the military . Brian yeah. Lemonis thank you for your service. Brian thanks for your support. Lemonis im gonna put everybody on the spot right now. If all the models that you guys made were Standard Units, how much quicker would the production process be . Mason significantly. Brian yeah. Lemonis double the output . Mason i would say so. Lemonis how are you doing, sir . Austin im austin baker. Lemonis hey, austin. Austin production manager out here. Lemonis how are you, sir . Austin great. Lemonis nice to meet you. So, are you in charge of the floor . Austin yes, sir. Lemonis you want to give me a little tour, just you and i . Austin please. So, im gonna show you the two types of trailers we build on. We are fabricating our frames right here. Were building them. Lemonis youre not even buying them . Austin were building them. Everything we can do, we do inhouse. We are so jammed, and its unnecessary. The word custom is sexy, and it sells. Lemonis it also does one other s. Austin ruins us. Lemonis slows things down. The real problem in this production process is that the customization slows things down. In tumbleweeds current manufacturing process, there are two distinct lines, meaning that only two homes can be built at one time. And while theyre being built, theyre done in four distinct stages. In stage 1, the trailer comes in and the floor goes in. In stage 2, the walls and the roof go in. In stage 3, the interior starts to get put in. And in stage 4, thats where they do the finishing touches. If theres one thing that needs to change in the unit, it slows down the entire line. When youve taken those ideas to steve, what does he say to you . Austin my ideas were shut down. He doesnt understand what we do out here, yet. Hes a restaurant guy. Lemonis has he ever worked in the shop . Austin no, and thats okay. Thats not his job. Thats what he pays me to do. Lemonis im surprised that steve isnt immersing himself on the floor with the guys, stepbystep, learning. How do i improve it by a day . Not just to make more money, but to help your people be more successful. Ii dont know why thats missing for him. Austin marcus, i wanted to introduce you to lee. Lee hi, marcus. Lemonis hi, lee. How are you . Lee very nice to meet you. Lemonis nice to meet you. What do you do here, lee . Lee c. O. O. Lemonis okay. Steve lee is brandnew. Hes been with us a week and a half. Lemonis and so, how does the reporting structure work here . Austin so, we have employee. Lemonis yep, one. Austin . We have leads. Lemonis two. Austin . We have the foremen. Lemonis three. Austin . We have the production manager. Lemonis four. Austin . Then, i have stephen schlosser, whos the gm. Lemonis five. Austin . Then, thats his boss. Lemonis six. Austin . Whos his boss. Lemonis seven. Austin yeah. Lemonis so, seven layers between you and the people that make the magic happen. Steve correct. Lemonis does that seem like a lot to you . Steve yes, it does. Lemonis how about to you . Lee no, it doesnt. The only redundancy that we might have is austin, because you have general manager, foreman the foremans over the two leads. Lemonis i was with you up until shop foreman. The further we get away from the work that, i get nervous. Steve lees like flight control. Do we have the parts we need . Which house is coming into the line next . Are the plans complete . Lemonis which is, normally, in a small business, what the owner would be doing. Steve so, i dont personally think that ive got the time to do all that. Lemonis so, what are you spending your time doing . Steve i do a lot of the website, backend work, as well. Its not a small job. Lemonis okay. It was kind of interesting meeting lee, because the things that he is doing, i would expect steve to do. Steve is too separated from what happens on the front lines. How are you . Tracy im tracy. Lemonis tracy, nice to meet you. I just spent a little bit of time with austin. Tracy my husbands name is austin, yes. Lemonis oh, its your husband. Tracy uhhuh. Lemonis okay. Tracy weve been married almost 13 years . Something like that. Lemonis i like him, by the way. Tracy hes very passionate about what he does. Lemonis yeah. Tracy and his people out there. Lemonis so, could could you take me through the sales process . Like, if i want to order a certain type of floor. Tracy so, youre basically asking for a customization on this . Lemonis yes, can that be done . Tracy if the Production Team says we can do it, im not walking away from the sale. Lemonis why . Tracy so, we get 20 of the cash upfront. Lemonis uhhuh. Tracy if i dont have a lot of cash customers for the month, those guys are struggling for materials. Lemonis so, better said you say yes to anything, especially if theyre a cash buyer. Tracy yes. Lemonis okay. Its become clear to me that every single unit that is bought from this company has some nuance to it that is slowing down the process. Tracy this house, right here, is a custom one. Lemonis i dont understand how youre getting upstairs. Austin youll never see this in any other house. This was this lady. Lemonis how do you get up there . Austin shes gonna get her little stepstool right here. Lemonis so, is there a disconnect between sales, design, and whats happening in the shop . Austin i cant blame sales, because they have to make money. Lemonis i want to ask you a question. Does steve know what hes doing . Austin no. Lemonis does he know how to manage people . Austin no. Lemonis does he know how to design things . Austin no. Lemonis whos really running this company . Tracy hes running the outside, and im running the inside. Lemonis doesnt something have to change . Tracy yeah. Austin if something doesnt change, it wont happen. Lemonis okay. Whats wrong . Austin so. Whats wrong . Lemonis talk to us. Tracy just that we love this place so much, and we love those people. We do it for these people. These people are here because they care. Theyre not because of the paycheck, i can promise you that. Lemonis the idea of being in the tinyhome business excites me. And after talking to tracy and austin and seeing the folks on the factory floor, i mean, theres a good recipe there. It just needs some major tweaking. Steve hi, marcus. I want to introduce you to my wife, bernadette. Lemonis bernadette, how are you . Bernadette nice to meet you, marcus. Lemonis nice to meet you. Bernadette thank you for being here. Lemonis i thought it may be a good idea for the three of us to go outside and talk, just, away from everybody. Bernadette yeah. Lemonis is that okay . Lets head out. You have kids . Bernadette two. Theyre in there. Lemonis oh, they are . Bernadette yeah, stocked up with snacks and games. Lemonis how old are they . Bernadette 5 and 7. Lemonis whats the year been like for you . Bernadette weve worked really hard, and id hate to see what weve worked for, um, disappear. Lemonis he smiles a lot. Bernadette he does. Lemonis is that a real smile, or is that just for show . Bernadette its a real smile. Steve i smile when im stressed, i smile when im nervous, and i smile when im happy. Lemonis well, thats good. Steve its my default position. [ laughs ] lemonis how hard has this been on him . Bernadette incredibly difficult. A lot of questioning himself. Steve i have taken a huge risk just to get here today, and ive pushed myself to the limit. Lemonis do the people that work here know how bad it is . Steve the top managers do. The rest dont. Lemonis you know that it makes me crazy that you have all these layers of people, right . Steve i know. Lemonis and so, if the business closes, what happens . Bernadette we start over. We start over from scratch, yeah. Lemonis what does that mean . You have to file bankruptcy . Bernadette mmhmm. About, like, a week away from that. It puts a lot of pressure. You can hear it in his voice, and then i know it, and then i cant sleep, and thats all you can think about and its spinning in your head and your stomachs clenched and. Its been very difficult. Lemonis wow. Steve when business doesnt go well, its hard to be a good father and a good husband. And thats the biggest disappointment. To me, the most important thing of my life is my kids, you know, being there for them. I havent been. Bernadette its okay. Lemonis okay. Do you have some financials we can look at . Steve yeah. Lemonis maybe head inside . Bernadette mmhmm. Lemonis i feel like ive gotten a good sense of the great people that work here. The fantastic product, while inefficiently made, still a really quality product. So, i commend you for that. Steve thank you very much. Lemonis lets go through the p l. Steve okay. Lemonis so, your total revenue for the last 12 months is 6. 9 million. Your gross profit is 2. 5 million. Your total expenses. Steve 2. 6 million. Lemonis and so, then, your net profit would be. Steve minus 100,000. Lemonis okay. Have you ever made money here . Steve yes. Lemonis whatd you make in 12 . Steve about 100,000. Lemonis whatd you make in 13 . Steve about 100,000. Lemonis whatd you make in 14 . Steve 400,000. Lemonis whatd you make in 15 . Steve in 15, we lost money. When we expanded, about 1. 1 million. Lemonis okay, so, 100,000, 100,000, and 400,000 is how much . Steve 600,000. Lemonis youre at a 600,000 positive. You lose 1. 1 million in 15. Steve mmhmm. Lemonis takes your 600,000 positive to a 500,000 negative. Steve well, there were no retained earnings, so these earnings were all taken out. Lemonis what do you mean they were taken out . Where did they go . Steve to me. Lemonis so, you took all the money out of the business . And so, at the start of 15, there was no money here. Steve yeah. Lemonis so, if i take everything your total liability of 2,885,000 against assets of 1,239,000, and that means that youre negative equity. This business is upsidedown insolvent to the tune of 1. 6 million. Steve correct. Lemonis the debt is so significant, really, it just sits with me in a very bad way. So, when i look around this factory, how did all of this get funded . Steve so, originally, the customers were paying upfront. Lemonis so, essentially, customers financed this whole business. Steve and also, in addition, i put some money in. It was 1,500. Lemonis 1,500 bucks. Steve correct. Lemonis okay. From an outsiders perspective looking in, you put very little money in the business. Whatever money the business made, you took out. The hole in this business, now, is 1. 6 million. Steve correct. Lemonis thats not even to provide any more working capital. Thats to get the payables current and all of the debt paid off. Steve correct. Lemonis and where youre sitting today is, in a business that, quite frankly, is out of business. And i have a real problem with the fact that you took 600,000 out of the business, in a business thats growing. Why did you take it all out . Steve i didnt see this coming. I didnt know it was gonna happen. Lemonis is this really a smokeandmirrors business . Steve no. We have a real product. Lemonis okay. Are you running a house of cards . Steve im running on the edge. Lemonis do you know fercockt means . Steve yes. Lemonis what does it mean . Steve it means all screwed up. Lemonis debt doesnt scare you, does it . Lemonis im curious as to why you say that. Lemonis because youre reckless about it. And because you didnt save any acorns for the future. The fact that youre not scared of debt in one breath, but youve taken on debt. This doesnt even, like, faze you. That freaks me out. Austin i mean, we were both yelling at each other, cussing. Its only a matter of time hes gonna fire me. Im nervous. I dont know what to expect, and thats why, i guess, im scared. Lemonis lets go talk to him. That freaks me out. That youre not scared of debt this doesnt even, like, faze you. Am i totally, like, bat [bleep] crazy, here . Steve no, i completely understand what youre saying. Lemonis so, you have a business thats 1. 6 million underwater, but the product is great, the people that work here are spectacular. So, im willing to lend this business 3 million to clean up the payables, the lenders everything so that the employees can continue to work and so that the company can breathe. Steve yes. Lemonis in exchange for that, i want to be paid back, and i want 75 of the equity. Based on steves pattern of how he deals with money, i have to structure this deal very differently than i normally would. And so, the money that im gonna put in is gonna go into the company in the form of debt and equity. So, not only am i gonna be the lender, im gonna have 75 of the equity. And while that may seem aggressive, i have to protect myself. Because when you look at the pattern here, i dont think i have a choice. Steve its certainly not the offer i was expecting. Lemonis whatd you think the offer was gonna be . A few Million Dollars and i sprinkle fairy dust in here . Steve 51 . Lemonis i want to help you be a better c. E. O. cause right now, youre a nice man and a terrible c. E. O. C. E. O. Is not a title. Its a philosophy. This would be a business that i would invest in with camping world, so that we felt like we were fully integrated. And so, do we have a deal . Can you agree to those terms . Steve yes. Thank you very much. Lemonis okay . Steve okay. Lemonis ill see you soon. Steve thanks. Lemonis hey, guys. We need to get everybody together right here. All right, so, come on down. So, ive agreed to invest 3 million, and i will be 100 in charge. Now, the challenge is, in my opinion, we have to standardize this process to really start to crank things out. We will have four standard models, and thats it, okay . I believe i can take any standard floor plan and make simple adjustments to it and sell them on the value of what we already created. cause honestly, people will change anything if you give them the right to. How many people like cake . Raise your hand. I like a onelayer cake, not a sevenlayer cake, and this company has so many fricking layers, so were gonna flatten out the organization, but were gonna be a team. I love investing in american businesses. We want to really be proud of what were making, and we need to put out good product. All right, lets get to work. [ applause ] tracy good job. Man all right, lets go to work. Lemonis all righty. I want to spend the evening, overnight, in a tumbleweed tiny home to understand why customers love it and how we can make it better. [bleep] when i went inside the unit, what was most interesting to me was how space gets utilized. This isnt wellthoughtout. Furnitures in the way. I wish this furniture was integrated. This windows too small. No collapsible tables. I think their use of space is not really great. My fat ass up here. Its actually kind of cool. What i felt was missing from the unit is Little Things that we have become accustomed to having in our homes, like charging stations a variety of things. [ knocking ] steve good morning. Lemonis good morning. Steve howd you sleep . Lemonis i didnt sleep bad. I like the fact that there was a very homey feel to it. I like the pitch of the room. I didnt feel claustrophobic. As i think about this place, theres a number of design changes i would make. I look for little creature features. And so, i thought about, like, where do i charge my phone at night . So, have you really slept in one . Steve i have. Lemonis overnight . Steve overnight. Lemonis for how many times . Steve ive slept in one in sonoma. Lemonis i am candidly shocked. This is how a leader gets closer to his business. Does he not care . Steve, let me ask you a question. Steve yeah . Lemonis how passionate are you about this business . Steve this has been a very tough and hard journey for me. Lemonis i need to see more from you. Steve tell me what you want to see. Lemonis looking at the finances, looking at the decisions youve made, looking at the layers youve added, rather than serving the business, youve had the business serving you. Steve you know what . I have to admit that youre right. I really dont have much experience in the manufacturing business. So, as far as construction goes, i dont know that were doing it right, and i know i need to improve that. I avoid conflict and i have not done a good job at Holding People accountable. And when i brought in lee, i recognized, heres somebody whos really good in execution, and if i hire him, hands off, solves my problem, i continue to be bad in execution. Lemonis in order for steve to prove to me and to the rest of the employees that he truly can be a leader, were going to have to remove some of those layers between him and the workers. What i want to see Going Forward is that you have the personal sacrifice and the commitment. Thats gonna be something that were gonna have to work on together. Why dont we head back to the office. Steve all right. Lemonis all right . In order for us to start designing the standard model, were gonna have to get feedback from customers. So, im taking a unit and the team over to camping world in colorado springs. Tracy so, this is a rviacertified rv built on a travel trailer. Im excited to actually have a couple of you guys go up there, so. Woman you need some more storage. Lemonis in order for steve to continue to develop his leadership skills, asking customers questions and getting ideas from them, and then, figuring out how to work them into his business is a good step. Steve all right, folks, i want to hear some feedback about what creature features this is missing and what other changes you would like to see. Man i would give it more Storage Space. I didnt see much cupboard space or Storage Space in the unit. Girl you should always have, like, something that you can pull out, and itll just be there as a piece of furniture. Lemonis integrated into the walls. The key to selling a product like this is selling value and experience, not selling customization and price. Thanks, folks, very much. Woman thank you. Guys, im gonna take austin to the service department. Ill see you in a little bit. Since austin is in charge of overseeing the production of the tiny homes, i wanted to show him some features and benefits from rvs here at the dealership. All of this furniture is integrated. This table can extend, but its part of the place. And i think the thing thats missing in the tiny homes is the lack of integrated stuff. But i also wanted to spend a minute with him away from steve, getting some feedback on how he and the other employees are feeling since ive made my deal. How do you think steve is right now . Austin i think, as a leader, very, very strong. But i will tell you, with lee, its only a matter of time until he fires me. Lemonis why . Austin stephen and lee they were meeting. They had conversations about a sevenlayer cake, and i was the sacrificial lamb. Im nervous. I dont know what to expect, and thats why, i guess, im scared. Lemonis so, why wouldnt you talk to steve about solving that problem for you . Austin with lee, hes an authoritative person. Steve, he absolutely hates conflict. Lemonis but he cant lead you if he doesnt know what youre thinking. cause if hes the ultimate leader. Austin right. Lemonis . Then why wouldnt you allow him to lead . Lets go talk to him. Lemonis i love the fact that austin feels comfortable enough to talk to me about whats happening in the business, but they need to learn to deal with their issues by themselves. I cant resolve their problems. Im not here every day. Austin i guess im just gonna squash this. Im afraid that, with lee, the way he was treating me, its done. Its only a matter of time. Lemonis if your business is in trouble and you need my help, log on to. Austin i guess im just gonna squash this. Im afraid that, with lee, its done. Its only a matter of time. Lees new. Hes only been there a couple of weeks, but hes an authoritative person, and hes gonna fire me. Im the sacrificial lamb, if you will. I guess, what im getting at is, just, asking for a little bit of help. Steve theres been a disconnect between you and i, for sure, right . Austin its the layer in between us. Steve so, first thing monday morning, its obviously something we should talk about. Lemonis first of all, i love the fact that youre having an open dialogue. And youve been a great listener, and youve been a great communicator. The guy gives you 100 . You have to hold onto them. They have to feel protected, and your job is to protect them. Steve yeah. Austin, you dont have to worry. Lemonis layers in the cake are creating a problem for the business. In most cases, it would be easy for me to make the decision for steve, but i really want steve to show leadership, that he will make sure that he addresses the issue himself. The reason people will go to battle for each other is, if he knows youll have his back. Austin shoulder to shoulder. Arms in arm. Im you steve okay. Austin yes. Lemonis lets roll. I think itd be a good idea if we can start working on what a Standard Unit would look like. Steve absolutely. Tracy perfect. Lemonis now that weve gotten the feedback from the customers on what they like and dont like, i want to take that information and incorporate it into the process of making the four Standard Units. Woman i would advocate for the door to the opposite end. Lemonis is that move possible, guys . Mason definitely possible. It opens up space to enlarge the bathroom, if needed, and the closet space. Lemonis in order for the design process to actually come out right, there has to be communication. So, i want to show steve another leadership tool, which is collaboration. Tracy this is a true great room here, and if i really wanted this to be a bedroom, i dont have a door intruding into my area. Steve youve got a tape measure there. Can you just measure the width versus the depth on that thing . Lemonis i like what im seeing with the team because everybody feels like their opinions being heard, and steves doing a decent job of actually orchestrating it all. So, next time i see you guys, i want to see two standard models, okay . Lemonis when we talked the other day about austin and lee. Steve yes. Lemonis i wanted to get an update on where you are. Steve myself, lee, and stephen started talking through the situation, and austin was pretty frustrated by it and left. He said, i quit, and he walked out. I think hes having a hard time with the changes. Lemonis so, hes not working here anymore . Steve correct. Lemonis i got to be honest with you, im totally confused, because a couple of weeks ago, steve and austin are talking about how theyre gonna Work Together and how steve is gonna protect him. And now, im finding out that, yesterday, austin stormed out of here and quit. Like, what happens when im not here . So, i call austin because i want to know exactly what happened. I want the facts. What happened yesterday . Austin they said that we need to figure out how to talk about the sevenlayer cake, and their way of addressing that and through our conversation was showing the hierarchy on the board. Lemonis okay. Austin and i jumped the gun because they circled me, and then, the three people below me. Lemonis meaning that one of you guys was gonna go away . Austin right. Lemonis and you just wanted to protect them. Austin if ive got to be the casualty, thats fine. Lemonis i partially invested in this business cause of you. We thought we were gonna Work Together. I told you, [bleep] happens out here, not in some fancy office. Austin someones gonna get the ax. Lemonis right. Austin and it better be me and not them. Lemonis nope. It aint gonna be you, and it aint gonna be them, either. Austin i mean, i lemonis it aint gonna be anybody thats on the floor. Austin thank you, man. Thank you, and i believe you. Lemonis why dont we get everybody together in the Conference Room from yesterday, okay . Austin yes. Lemonis hey, so, i know you guys had a gettogether yesterday. You want to, maybe, lead the process . Steve sure. Okay, so, what happened is, yesterday we had a meeting that started off on the shop floor and led into here, where, austin, you walked out. Austin guys, come on. I put three years of my heart, soul, and energy into this place, and then, my worlds turned upside down. Lee i agree in premise that we have a structural issue to fix in this company, but theres a difference between staying in the room and hashing it out and looking at your colleagues and saying, you dont know your business. I resign. There is the chance that this is the path that were going to go down. Austin well, what i saw was my family its turned upside down. Thats how i felt. Lemonis so, were you mildly relieved when he left yesterday . Lee the companys not profitable. The Business Model is not successful. Austin is it their fault . Lee the plan youre not letting me finish. Austin okay. Lee you resigned. You cant have people, especially managers, who just resign and then decide, mm, im gonna come back the next day, and im going to start work. Maybe the next day after that ill decide to resign again. Steve if you wouldve stopped and said, guys, i am not comfortable with this. I need the rest of the day to process, thats one thing. But you didnt contribute. You just said, hey, im out of here. Austin but i mean, steve, a guy that had been with you from the beginning that you talked very highly about you panicked. What is your opinion about what should change in the seven layers . Steve these two would go to one layer, and these two would go to one layer. Lemonis so, youre going seven to four. Lemonis and so, just out of curiosity ill just go ahead and start with you, cause youre squeezing yourself is you or lee surviving . Steve why not both . Why cant there be two people on the same layer . Lemonis are you really trying to sell me on this [bleep] . Anything change in the staff . Steve actually, a couple people have left. Lemonis people left . Steve yes. Lemonis oh. Steve yeah. Lemonis okay. Who left . Hi, im the internet you knoarmless bowling. Lt . Ahhhhhhhh you know whats easy . Building your website with godaddy. Get your domain today and get a free trial of gocentral. Build a better website in under an hour. Steve why not both . Why cant there be two people on the same layer . Lemonis are you really trying to sell me on this [bleep] . In one breath, youre saying you think theres too many layers. Your suggestion is, theyre comanagers . Steve correct. Lemonis steve, this is a very important moment. Both of our jobs is to put the company in front of our own personal interests. And so, you are permitted to come back to work here. Austin yes, sir. Lemonis and you and i will continue to Work Together. Steve perfect. Lemonis all right . This is the most dramafilled manufacturer ive ever been to in my life. Lee so, what are we thinking about the next few weeks . What would you like out of me . Lemonis i think you have to decide if you feel like, you know, you could add value here. I think thats the question. Lee i mean ive been around long enough that i think you need me lemonis yeah. Lee austin has some capabilities, but im not sure that he could run at the layer that really should be required for a company of this size. The right model is to have a gm or a site leader for this sized operation this plant youd have to burn it to the ground and redo it lemonis if steve was actually managing correctly and austin was able to get the Raw Materials and not have all these layers over him. Things would be fine. I just need to make a few tweaks not burn the business to the ground and start over the question is are you going to be here . Is steve going to be here . Or are neither of you going to be here . Lemonis currently, the trailer manufacturing of the frames themselves takes up over 30 of the floor space and so what i want to do is outsource the manufacturing of those trailers and the amount of production that i can run through that area will almost double the production of the company lemonis so we are at a local manufacturer called excalibur which by the way can produce twice as much as tumbleweed was able to produce before lemonis if i gave you 75 to make, whats the best you could do on that 75 . cause we think were gonna make call it 250 a year. Man lets do 80 of them at 4,900. Lemonis okay. Steve great. Man all right. Lemonis now that weve struck a deal to move trailer production off site, with the Additional Space being freed up in the factory, theyll be able to finish the existing customized units and now start making standardized units. Oh, hi steve good to see you. Lemonis whats going on . Im heading back to tumbleweed. I want to check in on progress, and i want to see whats happening with the Standard Unit. Steve so, were moving along. Lemonis anything change in the staff . Steve actually, a couple people have left. Lemonis people left . Steve yes. Lemonis oh. Steve yeah. Lemonis okay. Who left . Steve so, lee did leave. Lemonis why did he leave . Steve he was really, really. Upset about austin being brought back, being overruled on that. That was a hard thing for him. Lemonis right. Im surprised that lee made the decision to resign, and that he did it so quickly. And i never want to see infighting inside the business, and i dont ever like to see a power struggle, but theres a layer problem. And so, i feel like its necessary, anyway. And how has austin been . Steve hes been amazing. Im actually really grateful that you said youre bringing him back, because it was the right call. Lemonis austin. Austin how you doing . Lemonis so. Where is there a Standard Unit . Is there one started . [ sighs ] steve no. We havent started it. We still have to work these. Lemonis ones that were sold months ago . Steve yes. We did find a spot where were gonna squeeze a new Standard Unit, and the guys have done a great job. Theyve put the creature features into it. Lemonis while im a little disappointed that they havent put the Standard Unit into production, i do like the fact that the team is starting to work closer together, and that theyve taken feedback from the customers to start to come up with new ideas, new innovation, and new efficiencies. Austin this is our utility closet. Lemonis for what kind of model . Steve its actually going to all the models. Lemonis whats in here . Austin we have a furnace. We have an air exchanger. This could be an ondemand water heater. Your electrical panel. And your 12volt action going on right here. Lemonis i want you to patent this. This is the reason that the company can be worth something, because youve designed something that allows standardization to work. This cube can go in any unit. Steve correct. Lemonis when you take out layers out of the business and you push yourself closer, what happens with the organization . Steve communication improves. Understanding of what our goals and objectives are improves. I love the direction that its going. When we show you the other models. Lemonis can we gather up those plans . Steve yeah. Thatd be great. Christian and so, we have four models total with two floor plans per, is what were gonna work through, and end up with a total of eight. Lemonis so, i think now that you guys have got your head around that, what i want to do is, i want to take one Standard Unit and this team to a National Company that could potentially buy, maybe, 10 to 15 or 20 a year. But i need it to be done in probably two and a half weeks. Steve im gonna push back on marcus here, for a minute. Pat we have a similar unit, and the pitch of the roof was a little bit higher. Austin yeah, you raised it a little bit. Pat yeah. Would you have that flexibility . Stevso, my concern is,back on mwe took our best guysute. And we put them on this unit to get them to two and a half weeks, and the other ones get slowed down. One of our rules is, weve got to protect the floor, and when we do this, we dont protect the floor. Lemonis hallelujah. I think your explanation of wanting to protect the stability of the floor makes me want to follow your lead. And i appreciate you having that evolution to say, i want the sale bad, but im not willing to break my people or my customers for it. And that, for me, is really the epiphany. So, what is the time . Steve well, its about 3 1 2 to 4 weeks. Lemonis so, can you compromise 3 1 2 . Steve yeah. We can do 3 1 2. Lemonis so, the task is to get this unit made. We will take the unit to a location, and the group will pitch the entire company. Steve okay. Lemonis . On becoming having a National Account that will buy from you on a regular basis. Okay . Im gonna let you guys work. Now that the team has Standard Units in production, we can accelerate the purchase of Raw Materials, improving our margins. Not only do we have them readily available, but were getting a pretty significant discount because were buying in bulk almost 8 on the material side. I estimate that it will be close to 4,000 a unit. Across 200 units a year, thats 800,000 of additional gross profit. This is a standard floor plan . Steve its a standard floor plan. Lemonis so, how many days will this have normally taken to make as a custom unit . Steve wouldve been about 21, 22 days. Instead, its gonna be about 16, 15 days. Lemonis and now, what did they pay for it . Steve 80,000. Lemonis and what did it cost you to make . Steve our costs on this one are gonna be 46,000. Lemonis so, your margins are 40 . Steve 40 . Were improving. Lemonis and how has austin been . Steve hes been amazing hes doing an amazing job. Were communicating in a way that weve never communicated before. Austin hes talking to us. Hes getting involved in the decision instead of just making a decision, hes seeing how the decisions are affected. Lemonis is he spending time on the floor . Austin heck yeah. I dont even know when hes left. Lemonis its clear to me that the elimination of layers actually brought people closer together particularly, steve and austin closer together. You can see that theres a relationship built on mutual respect, and that, for me, is progress from both of them. Austin were not having to reinvent the wheel, per se. We know what we need to do, and were just gonna execute on our plan. Lemonis now that the process is really right and the standardization has been implemented, i want to take steve and the team, along with one of the units, to meet with representatives from Equity Lifestyle Properties the premier campground operator. The primary reason is to really see if theres a real potential for big orders here and if steve truly can sell it with conviction. Oh, this is awesome look how cool this is steve yeah. Lemonis how are you . Jeff hi, there. Lemonis im marcus. Jeff im jeff wehrung. Nice to meet you. Lemonis jeff, nice to meet you, sir. Steve good to meet you. Im steve. Jeff nice to meet you, steve. Annie hi, im annie. Nice to meet you. Lemonis annie . Annie yes. Lemonis nice to meet you. Steve tell us about this place. Pat okay. Annie sure. This is the mt. Hood tinyhouse village. Lemonis whats the most popular unit here . Pat lincoln is one of our most popular units. Annie they all have names and personalities. Lemonis well, lets go look at the new tumbleweed tiny home. Pat sounds good. Jeff thank you. Annie thank you. Pat all right. So, this is the new unit. Steve i wanted to start by having tracy and austin you two have spent a good amount of time working on this unit, perfecting this unit. Tell us about what you guys accomplished. Austin ive built about 350 of these now. This is probably the first one you can actually move in right away. Theres more storage in this house than any of them. Pat very nice. Tracy some of the biggest feedback that weve got from some of the focus groups is that they didnt want to just expose their clothing or expose their food. So, we really honed in on that on this unit. Annie yeah. It looks very clean. Pat very clean. Jeff its bright in here. Pat it is very bright. Steve we did change the lights, didnt we . Austin yes. We went to recess lights, led lights. The bedrooms up on a dimmer. Lemonis oh, let me go try it. [ laughter ] tracy we wanted to integrate some of the creature features of your daily life in this unit. We are actually prototyping some different builtin furniture. Pat you did a great job. Annie yeah, you did. Pat it looks really nice. It does. Tracy how you doing up there, marcus . Lemonis good. Tracy you like that dimmer . Lemonis just so you know, dimmers are my favorite thing. [ laughter ] austin you see the usb up there you can plug your phone into . Lemonis i think what i love about this Standard Unit more than anything else, is that, the team really listened to what the customer said integrated furniture, space. And the fact that they were able to process that information and integrate it into the standard model shows me that theyre good listeners. And thats the key to manufacturing feedback to final product. Tracy the bathroom, ladies. Annie yeah, this is huge. Pat wow, nice oh, this is great. Tracy it was really just about making sure that we were really maximizing. Pat every inch counts with a tiny house, right . Annie absolutely. Pat that is great. Yeah. Very nice, tracy. Austin and this room right here is our utility closet. Its all located in one area for your maintenance man. Pat yeah, this is great. And then, i know we have a similar unit and the pitch of the roof was a little bit higher. Austin yeah, you raised it a little bit . Pat yeah. It makes a big difference when youre in the loft. Lemonis to make the roof higher . Pat yeah. Would you have that flexibility . Lemonis what im wondering is. What steves response is going to be . If he starts agreeing to well well change this by an inch and that by an inch and move the roof up and well do all these things i just wasted a bunch of time were not doing that for exclusives, extras, and business advice, visit theprofit. Cnbc. Com. Kes a big difference when youre in the loft. Lemonis to make the roof higher . Pat yeah. Would you have that flexibility . Steve so, just keep in mind, as long as we can make them standard, then were gonna be great. We cant be doing the custom game. Lemonis i got to be honest im really impressed that steve isnt falling back to his bad habits where he would let a buyer of a product just drive the process. [ chatter ] were all in the back room this is the product we make. We know its awesome. We hope you buy it. Thank you. Pat well, it looks good. You guys did a great job. Steve thanks. So, what, would you say 5 units, 10 units, 15 . Pat whats the price point on this unit today . Steve all right. So, the price on this one is 79,000. It does have a couple upgrades. Pat youre ordering multiple units, then what does that do to the discount . Steve when youre buying half a Million Dollars, youve got your discount. When we get over 750,000, if we get an order past that, we will increase the discount. And then, if we get past 1. 5 million, well increase the discount even a little bit more. Lemonis retroactive. Steve retroactive, right. Lemonis and so, does that seem like an arrangement that we can move forward on . Pat absolutely. Lemonis awesome. Pat yeah. The relationship has evolved. Lemonis thank you very much. Jeff thank you very much. Lemonis impressing an Industry Leader like els is no small task, and the fact that theres a real potential for big orders is a big accomplishment. Whats changed with steve, guys . Tracy i feel like hes actually reaching out to a lot of our employees, and theyre recognizing it and theyre seeing it. Austin ive heard from the floor they use your name now. You helped involve people in the business. So much so, this guy is in my business too much now. [ laughter ] he knows things i know, and i dont like that. So, i mean lemonis but you respect it. Austin i respect the crap out of it. That means cause hes actually out there on the floor, and its a hard job. Steve thanks. Lemonis steve and i weve made the decision to have you guys become partners in the business. Tracy wow. Lemonis we want to distribute some equity to you, and we want you to feel like youre connected to the business as more than just a team member with a paycheck. Tracy i dont even know what to think about that. I mean, thats amazing. Austin i dont even know what to think. I feel like im dreaming or something right now. Tracy its just, hard work pays off. Lemonis thats right. Youre building something for your family together. Okay . Austin well. Steve congratulations. Lemonis when i think about my investment into tumbleweed, i probably couldnt be more excited because with the new standard models and the new manufacturing process and an Unbelievable Team on the floor and a new revived leader, as far as im concerned, tumbleweed has a very bright future. Lemonis okay. Im gonna run, guys. Ill leave you here. Steve okay. Al right. Lemonis ill see you soon. Ill see you soon. Tracy bye, marcus. Lemonis thank you for everything. Im very proud of you. Tracy thank you. Lemonis im very proud of you. Lemonis tonight on whats the f stand for . Farmington . Fun. Lemonis at a denim apparel business based in detroit, the jeans are stiff. Yeah. Youve got to do the walk. And so are the owners. No. No. No. One of them stamps out any idea that isnt his own. Im fearful of just letting anyone do anything. While another obsesses about the smallest of details. Ive spent hours researching about exactly how to account for every half second. And the third cares only about his own payout. Doing the books is not of interest to me. Even though your a cpa . Even though im a cpa. Yeah. If i cant get them to embrace new ideas. This company will not survive as a mens jean company