Transcripts For CNBC The Profit 20240714

Lemonis if i cant force her to accept the truth, warts and all, this companys gonna go right down the drain. Max i feel like we deserve more because were worth more. Lemonis you need to cut the. 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 2008, california native max kater founded murchisonhume, a maker of nontoxic cleaning products. Max this is an allpurpose plantbased cleaner. Lemonis a former fashion editor, max was living in australia when her son became allergic to ordinary cleaning products. Max i just needed something that i could clean the house with that looked good, that smelled great, that i could trust. Lemonis she saw the need for products without harsh chemicals. Murchisonhume was born. Max can you send me the new images that i did . Taylor yeah, that you shot over the weekend . Max yeah. Lemonis the business grew fast. And as revenue approached the sevenfigure number, max set her sights on the u. S. Market. So she moved her family to los angeles. And thats when things went south. Max im sorry, tay. I think im gonna lose it. Lemonis five years in, the product has failed to connect with the u. S. Consumer. Max we cant be that expensive. Lemonis and max is now struggling to stay afloat. Max if we dont pay our entire bill, theyre gonna shut us down completely. Lemonis cleaning products are a 50 billion industry. And theres plenty of room for ecofriendly brands like murchisonhume to grow inside of that. If i can figure out how to jumpstart sales, it wont be long before this companys cleaning up. Hello. Hi. Lilian hi. Im lilian. Lemonis lilian, nice to meet you. Lilian yeah. Peter . Peter hi, marcus. Im peter. Lemonis peter, nice to meet you. Im marcus. Peter yes. Lemonis how are you . Hannah hi. Hannah. Lemonis hannah, nice to meet you. Taylor im taylor. Good to meet you. Good to meet you. These are the dogs. This is domino and zeus. Lemonis are these greyhounds . Taylor no, theyre actually whippets. Max whos for tea . Im making some. Oh, youre here hi taylor this is max. Lemonis how are you . Max lovely to meet you. Lemonis i was meeting the company mascots. Max oh, yes, our fur babies. Lemonis they normally have this kind of disposition . Max yes, theyre very calm. Lemonis do they take on their owners disposition . Max probably not. [ laughs ] lemonis okay. Max kathleen, she is working as our sort of interim cfo. Lemonis great. Max . To help me with numbers. Lemonis this is nice. Taylor it doesnt look like much from the outside. Lemonis but its pretty inside. Taylor yeah. Lemonis what is max oh, this . This is my mood board and my inspiration board. And its the kater family. Its kind of murchisonhume world. Lemonis when i walked into the office for the first time, i wasnt really sure i was in the right place. I see fine china and fancy furniture. I thought this was a place that was selling toilet bowl cleaner. Max okay, so we started in 2008 in sydney. And it was basically me lemonis sydney. . Max sydney, australia. My husbands australian. We met actually in hong kong. Peter max was working as the fashion editor for the south China Morning post. Max and petes not in the business, obviously, daytoday. Hes making money for us to live on. Lemonis and so why did you start this business . Max i had a young 18monthold. Lemonis okay. Max . Who was born with eczema, asthma, and allergies and allergic sensitivities. So when i was cleaning the house, it would exacerbate them. And i thought, im just gonna make my own. So i would get, like, plantbased cleaners. It was absolutely nontoxic. Lemonis and thats the cleaning agent . Max yes. Lemonis wow. Whered the name come from . Max its peters fathers two middle names, Roderick Murchison hume kater. Hes on the wall over there. Hes a very elegant man, and hes president of the australian club. Lemonis very refined. Max yes lemonis have you had any headwind in the states with the name . Max ive had resistance, yes. Lemonis murchinson, i just max yeah. Its murchison. Lemonis murchison. Max yeah. Lemonis not murch max theres no chin. Lemonis murchisonhume. Max i just thought it sounded like it had gravitas. Lemonis when you name your brand, you want it to be something memorable and that has real clarity to it, not something with gravitas like a law firm. Are these the products right here . Max yes. So, we do glass cleaner, floor cleaner, hand soap, dish soap. Lemonis what i like about it is it smells like an essential oil. Max yeah. Lemonis can you bring all skus onto this table . Max yep. So were gonna do glass, floor. Do we have a new floor cleaner . cause thats an old one. We need a pot brush, honey. Can you grab a pot brush . Dishwashing, hand soap. This, i loved. It was a sneaker spray. Lemonis you sell it at shoe stores . Max [ laughing ] i tried. Lemonis here are the cleaning products. Max yeah. Lemonis theres eight of em. Max yeah. Lemonis okay, a candle is not a cleaning product. Max correct. Lemonis leather lover, shoe spray, garment cleaner, i mean, im just being honest. I dont know who youre trying to be. I would have expected this company to have a few categories with different skus inside of each of em whether its hand soaps or bathroom cleaners or whatever it may be. But instead, theres close to a dozen categories with no direction. And some of them have nothing to do with the other. What are the price points . Max so, the triggers, theyre all 9 at retail. Lemonis 9 . Max i know. Lemonis who can afford that . Max [ sighing ] yeah. Lemonis a product like this should cost between 5 and 6, not 9. And unless the person that sold it to you is gonna come actually clean your house for you, no ones gonna pay this price. And where do you manufacture it . Max we manufacture it in skokie. And we ship it to dallas. Lemonis a thirdparty Logistics Business . Max correct, in a 3pl. Yep. Yeah. Lemonis that seems inefficient. So for a typical bottle like this, what does it cost . Kathleen 37 cents for the bottle. Lemonis okay. Kathleen closure is 14 cents. Lemonis okay. And then how much is the label . Kathleen the label is 18 cents. Lemonis okay. So now, were at 0. 69. The box is 6 cents. The filling is 35 cents. The partitions are 7 cents. Lemonis okay. Kathleen and. Lemonis ingredients. Kathleen . Is 12 cents. Lemonis so at 1. 29, its still sitting in chicago. Max yeah. Lemonis wheres the next place it goes . Max dallas. Lemonis okay. What does it cost to get it to dallas . Max 50 cents a bottle. Lemonis max may not realize it, but this little pit stop in dallas for the product is costing the company a heck of a lot of business. Murchison products are made in chicago, then transported to dallas and then shipped out from there. To get em to dallas adds another 50 cents of cost to each individual unit. But keep in mind, murchisonhume, like any wholesaler, sells to retailers at twice its cost, meaning that the 50 cents turns into 1 by the time it gets to the retailer. Then the retailer adds its markup. And that dollar becomes 2. And now an extra 2 has been tacked on to the retail price just because of dallas. And what do customers do when they see that inflated price . Well, you take a guess. They walk away. Walk me through this. Max so, we used to have a textheavy label. I wanted to make it easy for the customer to identify. So for me, its an icon. Lemonis im gonna challenge you on that. Max oh, no. Lemonis i feel like its, like, buying products for my castle or something. Taylor the chairs kind of like a chair that would be in a castle. Max easy to identify, stylish, chic. Lemonis anybody have a chair like that in your house . Kathleen no. Max i do. Lemonis is this the first time youve ever heard this . Taylor weve talked about it with some of these icons. Lemonis she doesnt listen . Kathleen she [ laughs ] lemonis do you think theyre too fancy . Taylor the bun is pretty tight. Max its a chignon. Lemonis what is that . Max its french. Lemonis its probably french for tightass product. [ laughter ] this isnt for everybody. High style is clearly your game. If you were a fashion editor of a magazine, which you were, i would say okay. Your price and potentially your icons could be barriers to entry for people. Max okay. Lemonis . Who think its too, uh. Taylor fancy. Lemonis fancy. Look. Forget about the fact that these icons alienate regular people. The bigger problem with them is they dont actually describe what the product is. Like this lady with the bun. You would think thats hair care product, right . Nope. Its bathroom cleaner. What do you do here . Taylor i do marketing, design. Lemonis like, art director. Taylor yeah. Lemonis so when you have a new idea for a new product, how does that process happen . Taylor well hang a bunch of variations on the wall, like in that office. Lemonis can you show me . Taylor yeah. We print everything out, and theres, like, multiple iterations for some of these. Max will want to do one thing. Ill want to do one thing. You know, we argue. And we dont look like a cleaning product. Its royal. It looks like, you know, the queen of england would have it. And i dont think it should cause we make toilet cleaner. Lemonis what is the best in show trademark . Taylor we own that. Thats registered. Lemonis oh, really . Taylor yeah. Yeah, we bought that. Lemonis look. I have a pretty big investment in the pet industry. Its a chain of pet stores called bentleys. Now, i dont know much about maxs pet cleaning products, but the brand best in show, well, that trademarks worth something. Id like to actually go over the financials with everybody. Kathleen okay. Lilian okay. Max come on, domino. Come on, zeus. Lemonis when i look at 2015. Kathleen yeah. Lemonis 900,000 of revenue, 489,000 of cost of goods. Then all the expenses is 888,000. Kathleen mmhmm. Lemonis so last year, the company lost 477,000 . Kathleen under the ceos margin. Lemonis theres a ceo here today . Kathleen the ceo left. She got pinched by playboy. Shes doing their digital marketing. Lemonis oh. Why did you hire a ceo . Max i dont feel qualified to be a ceo. Lemonis cost, sale, gross profit. Max not hard . Lemonis yeah. Max to minimize our 3pl cost, were gonna try and bring inhouse our directtoconsumer shipping. So were gonna fulfill downstairs. Lemonis so youre gonna get in the distribution business in an office plaza . Max kind of, yes. Kathleen were really not hoping to do so. Lemonis its not a Distribution Center. Its a Little Office in a strip mall. Secondly, i dont think its ever a good idea to distribute products from one coast or the other when you know that your buyers are all over the country. You own approximately 80 of the business. Max yes. Lemonis and the assets that are left inside the company are 289,000 of inventory sitting in the warehouse. Lemonis so on the Balance Sheet, 80,000 in payables. Theres 53,000 in cash. Your past two payables exceed your cash. Youre sort of out of gas. Kathleen definitely. Max marcus, some tea. Lemonis even when i mention the numbers and the fact that they were really bad, and i felt like i was at afternoon tea. Can i spend a minute with max, just her and i . At what point are you gonna worry that your doors are about to close . I think she actually is in denial. Max, it feels like you guys are slightly delusional about whats happening. Its like it doesnt feel like a company in crisis to me. It feels more like appearances than reality. Max by all rights, we should have been out of business 3 months ago. Lemonis why are you continuing . Max [ voice breaking ] i just cant give up because i will have let everyone down. And i will have moved my family away from our Beautiful House to come out here and live in a little house thats too small for us on a highway. I owe it to my family to not give up and stay and figure it out. Lemonis okay. Let me pore over these numbers. Max yes. Lemonis and you and i will connect a little bit more, all right . Max ill repair my lipstick. Lemonis good seeing you. Good to see you. Peter good to see you again. Lemonis so, hows the process been for you guys so far . Max very good. Lemonis is there anything that i didnt ask you that i should have . Max you asked me why i started the company. I dont feel like i gave you an articulate answer. Lemonis mmhmm. Max so, for me, its just making everyday domestic tasks more glamorous. Lemonis right. Max so it feels like a treat. Lemonis so you know people that would spend 9 on a cleaning product . Max yeah, they do. Yeah. Lemonis general, like, normal people . Max i mean, our database is not just aristocrats and movie stars. Lemonis do you know aristocrats . No. Max well, yes. [ laughs ] i do. Lemonis are you an aristocrat . Peter no, definitely not. Max well, your grandfather was a sir. Lemonis from a price standpoint, from a packaging standpoint, it is built for the aristocrat lifestyle. Max yeah. Lemonis how much money do you think the Business Needs . Max i think it needs about 1 million in order to launch personal care. It feels more complete. And as a beauty editor lemonis [ laughs ] max why you laughing . Lemonis im laughing because you want to start, from scratch, a personal care product that you dont have today. The Company Earlier that had all these things on the table, and you stood there, and you were like, wow, i didnt realize it was just got even. Max more complicated . Lemonis yeah. Its gonna turn into another train wreck. Max then what do you see . How do you obviously have an idea. Lemonis i dont think you need 1 million because im not the person to give you 1 million. Im not even the person to give you a half a million dollars. Its too big of a crapshoot for me. And so im not willing to invest more than 250,000 in the business. The amount of money that should go into this company should be limited because its not complicated. It needs getting the imagery right and getting the cost down and negotiating with a new bottler and a new warehouse. And i feel like im gonna have to do more leg work than i typically would. And so my offer has to be for at least 50 . At least. Max thats gonna be a problem. [ sniffles ] sorry. [ sighs ] okay. Get it together, max. Lemonis coming up. Thats a little weird that this got staged. Max its like putting lipstick on. Lemonis you continue to work hard to make things look different than they are. 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And i want to own 75 of the best in show trademark. Max can i have 30 of best in show, since i came up with it . And i will work my butt off for you. And i have ideas. Okay. Lemonis yes. Lemonis while i went down from 250,000 for 50 to 250,000 for 30 , i more than made it up by taking 70 of best in show. I picked up an additional 20 of equity that i wouldnt have had otherwise. I always tell people my best offer is usually my first offer. Max im down with that. Lemonis so we have a deal . Max we do. Lemonis okay. Thank you. Thank you. Max thank you, marcus. Lemonis congratulations. Max thank you. Lemonis congratulations. Max welcome to murchisonhume. Lemonis the deal that we made is for me to invest 250,000 into the business to drive down the actual cost of goods. These products cannot cost 1. 79 for a bottle. And its my opinion that the brand feels disconnected from the average american. We need to update the branding to make it more relatable to the masses. But what i ultimately want to do is narrow down the number of categories that they currently have in their lineup and, once weve narrowed those down, develop really good products inside those categories. And i want to make sure that this product is in retailers across the country. Max, i think you struggle with your ability to be a good ceo. I think your confidence is shaken. You have the capability. Max i have a hard time embracing that title. Lemonis my goal is to give max the tools and the resources and the contacts and let her run her company. Max thats all i need. Lemonis yeah. Great. Feel good. Max told me that she sold her products at the Container Store, so wanted to head over and see what it looked like. What im ultimately looking for is to see the companys positioning on the shelf. The better the positioning, the better the product is selling. Theyre giving you a pretty significant max they always give us great real estate. Lemonis it normally looks this good, huh . Max always on an endcap. Lemonis wow. Max theyre very good. Lemonis does it typically look this plentiful . Alana its usually just one row that weve got down towards the bottom. Lemonis which shelf would it typically be on . Alana it actually would go right along this one here. Lemonis this one here . Alana yes. Lemonis and so when did we get a better space . Alana uh, we just moved it yesterday. We were asked to move it up to the top. Lemonis okay, by the regional manager, or. . Alana no, that was something that i think someone from murchisonhume had asked us to do that. Max taylor came in and did a tidyup. Lemonis do you get a planogram from corporate . Alana we sure do. Lemonis okay. I would love to see that, just to get a feel for it. Alana sure, let me grab that for you. Lemonis what i ultimately wanted to solve when visiting the Container Store was to understand how the companys products were selling through the retailer. What i didnt want to have happen is max create this facade that the products were doing better than they were. You cant fix the business on false pretense, because you dont know what youre actually fixing. Lemonis thats a little weird that that this got staged. Its a little weird. Max well, you know, its like putting lipstick on when you know youre gonna be on television. Lemonis its almost becoming funny for me. Max what . Lemonis that you work hard to make things look different than they are. The fact that taylor came here with your direction and had her manipulate products, i do not agree with it at all. And its wrong. If your business is in trouble and you need my help, log on to theprofitcasting. Com. Cake in the Conference Room showing em youre ready. To be your own boss. Thats the beauty of your smile. Crests three dimensional whitening. Removes stains,. Whitens inbetween teeth. And protects from future stains. Crest. Healthy, beautiful smiles for life. 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And had her manipulate products, lemonis the fact that taylor came here with your direction thats a real problem for me. Max we wanted it to look good. I said, make sure its not dusty, and lemonis i hate the fact that the decision had an underbelly to it. Alana so here is what it would normally look like. Lemonis okay. Theyve dedicated to merch one shelf. And so what we need to make sure is that we narrow the products down to whatevers gonna give them the fastest turn and the greatest margin. What i learned is that maxs product isnt doing that well. Its not up to the standards that Container Store would like it to be to be in an a position. Its a c position. So im guessing its there because of the actual Sales Results that exist. And thats a function of price, the branding, the messaging all the things we need to fix. The main reason that murchison products are so expensive is that theyre manufactured in one state, the distributed out of another state. What we need to do is bring it all under one roof. So im bringing max to visual pak today. Max oh, wow. Lemonis . An organization that could actually do everything in one spot, eliminating all those extra costs. Were also gonna drive down the cost of our ingredients. Timothy you might have a chemical equivalent that we buy in really, really large volume. Lemonis you will get a pretty heavy discount on fragrance and poundage. Max good to know. Lemonis so the more we save, were gonna be able to drive down our wholesale price, which ultimately drives down the retail price. I also want to start eliminating some of our product categories. So we need units and dollars. Max uh, countersafe. Lemonis and what were the units . I want to drill deep into the numbers so that we know what products sell and what products dont. So, kathleen, what i need you to do is to build one sheet of paper. Kathleen mmhmm. Lemonis . That takes all of the skus. Puts the margin. Kathleen mmhmm. Lemonis and then well take our top skus, and well push those products. Max all right. Lemonis look. We can have the best price in the world and the best product in the world. But none of its gonna matter if we dont have our branding right. So im coming in today to talk to max about our packaging. Okay. So, i want to work on the label so that it maybe is a little more, um. Relatable. And i just want to sell a bunch. Lets have taylor just maybe the three of us sit with him. Max okay. Lemonis and work on some ideas. Max all right. Lemonis all right . When you think about this, like, what would you change visually . Taylor visually, when we went to the icon, i felt we were more approachable. Max the other idea was that people that might have help in the house that doesnt necessarily speak english, its easily identifiable what it is and what its purpose is. Taylor did you see the other line in there, clean evolution . Lemonis who did this whole design . Taylor uh, i did. Lemonis its kind of clever. Can we work on your computer for a minute . Taylor yeah. Lemonis okay. Lets do it together. It turns out that taylor had mocked up another name for the brand called clean evolution. So i figured, lets play with it. You want to let people have their ideas and not shoot em down. You may actually just get a heck of an idea out of it. I wanted max to understand that. You changed that to clean evolution . Taylor uh, yeah. Max you know i hate clean evolution. What do you think of the name, clean evolution . Taylor um, i think it could be interesting. How bout that forwardlooking tub . It was a pedestal tub, but it wasnt so stuffy. So we can print this and mock it. Taylor yep. Lemonis this is just a mockup, just an idea. So, pluses and minuses for the change. Max i mean, i see all minus. Lemonis all minus . Max yeah. Because the name, obviously, and the bathtub straight on look like a muppet. Its insipid. Taylor thats a little confusing. I like the idea of going with a bathroomrelated icon, makes a lot more sense to me. Max i just cant get past the icon. So, to me, this would be, like, a mies van der rohe chair in a castle in scotland. It doesnt it looks weird. Lemonis a mies van der rohe chair . In a castle . In scotland . I dont know what that is. Which one do you like . Kathleen mm. Lemonis be honest. Kathleen i like the clean evolution. Lemonis you like this one better. Kathleen yeah. Lemonis the clean evolution is an easier name to pronounce, to do google search. The more esoteric the icon is max yeah. But we dont want them to lemonis people are, like, oh, my god. What is this . Is it shampoo . Do i use it in the ladies bathroom . You need to be able to deliver something clear and understandable for everybody. So id like to keep moving forward on this. Max but what about a different iteration of the name, like m. Hume or m. Home or lemonis no, thanks. All right. While everybody else is in the office, and theyre enthusiastic about it, max put up this wall. Her openness to discuss new names or new labels or new ideas is zero. And you can tell shes getting annoyed. As the ceo of the business, this is one of those challenges, tough decisions. Got to pick a name. Got to pick the icons. Max theres no way in hell. Ohh. [ sighs ] byebye, pretty, little, fancy labels. Were gonna be separated from each other. That cant happen. Its wrong. Lemonis im working with taylor. And the next thing i know, shes disappeared. [ ringing ] max hello . Lemonis max . But i dont think you think im hokeydokey kaboom, either. I dont think your vision is wrong. I think your vision just needs refining. And so, with that being said, i wanted to find out how we ultimately solve the problem that you told me you wanted my help with. Im more reasonable than you think right now. What do you mean only if it was true . Are you telling me that im lying to you . Max you asked me. I let you talk. So i think you i lemonis no. But you just accused me of lying to you. Then it sounds like youre youre making a decision to not want to move forward. Coming up. My offer was 250,000 for 30 . Max we dont feel great about that. If you want 30 of this company, we deserve more. Lemonis you need to cut the [bleep] max i dont see why its a big deal. Lemonis you shook my hand under that deal. Lemonis bin. E. Ok my hand under that deal. And out. Every breath makes you feel closer to nature. And every sip makes nature feel closer to you. Michelob ultra pure gold. Beer in its organic form. If you have moderate to thsevere rheumatoid arthritis, month after month, the clock is ticking on irreversible joint damage. Ongoing pain and stiffness are signs of joint erosion. Humira can help stop the clock. Prescribed for 15 years, humira targets and blocks a source of inflammation that contributes to joint pain and irreversible damage. Humira can lower your ability to fight infections. 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The Gillette Skinguard has a guard between the blades that helps protect skin. The Gillette Skinguard. My first job is to care for derek. Everything i do is for him. When i moved to this apartment after six months, we need to connect with the world. I use the internet to keep him in the language, because thats the way to connect to my familys traditions. He has to know where he comes from. We need internet essentials. Theres no excuse to not get connected. Go where my baby lives b[ growl ]olle s good boy. Hey. Hey. You must be stevens phone. Know whos on your network and control who shouldnt be with xfinity xfi. Simple. Easy. Awesome. Lemonis then it sounds like youre youre making a decision to not want to move forward. Max that is not what i said. Lemonis every company that ive ever been involved with will all tell you the same thing. My intensity level in the beginning is a lot higher because i need to get down to find out what the real issues are. If i didnt think you were built for this, and i didnt think you could run the distance i can see how anybody that goes through this process has that fear and anxiety. You have to really trust that i came here to genuinely work and help your business. Look. Max tells me that this behavior of hers comes from a place of insecurity and her lack of confidence in herself. And while i didnt appreciate her hysteria, i thought it was important to get her refocused and build her up a little bit. Im glad we talked. See ya. Im meeting with max today so i can follow up with her on what progress shes had with the labels. But i also wanted to introduce her to a friend of mine, someone that could serve as real inspiration. Most people know her as a supermodel. But i know her as a phenomenal businessperson. Max hello. Kathy hi. Max hi, kathy. Kathy hi, max. Kathy. Max i know who you are. Kathy how are you . Max its very nice to meet you. Lemonis over the years, kathy has built a multibilliondollar branding and products company. Very few people know branding better than her. And what i was hoping happened more than anything is that max would listen to her, because she hasnt listened to me yet. Max im a bit of a fan girl. So im a bit [ laughs ] kathy youve got a great product. Now weve got to get people connected to it. Max yeah. Lemonis lets see some new packaging. Max okay, so, this is our current bathroom cleaner. And this is what it looks like. We came up with a new name called may home. Its easy to say. The second one, we went with m h. No . Okay. Lemonis last week, we talked about moving away from the name murchisonhume. But the first thing she brings out is a murchisonhume product. If she thought she was gonna find a receptive audience in kathy, sorry, i dont think thats gonna happen. Max i brought you a wild card, clean evolution. Lemonis wheres the clean evolution with the bathtub . Max we didnt put it with the bathtub. Kathy i like the idea of the bathtub. Lemonis im hoping, over time, that all of this advice will start to sink in. Please let it sink in. Youve struggled with acknowledging that youre capable of being a ceo. Right . Max okay. Yes. Yes. I guess to me, a ceo is a person that has been to business school. Kathy my formal education ended when i finished high school by the skin of my teeth. Youre qualified. We both come from the fashion industry. And so much about it is an illusion. My hope for you is throw away the facade. Lemonis kathy, thank you for coming. Kathy thank you so much. Lemonis youre so awesome. Kathy and, max, im so happy to get to know you. Max of course. Thank you for giving me your time. Kathy im so proud of you. And im excited for you. Max thank you. It was lovely to meet you. Lemonis i was back home in chicago. So i decided to fly in max so we could visit bentleys, my pet chain. Im excited about the best in show trademark. And so i thought we could Work Together doing some research and coming up with some ideas. Max [ chuckling ] hey. Lemonis but i guess max had Something Better to do. She took her sweet time to show up. What happened . Max im sorry. I dont know chicago. Lemonis its been like 45 minutes. Do you not like being on time normally . Max im always on time. Lemonis you werent on time this morning. Max ii agree. Is this your grooming . Man yeah. This is it. Lemonis what products would you use on your own pet that are here . Max this looks cute. And it says natural. But i can tell its not natural right now. Lemonis the principles behind this particular store are no byproducts, no corn, wheat, no soy. Everythings natural, nothing from china. Max okay. The pearlized texture tells me theres something more going on than aloe vera and lavender oil. Stephanie okay. Max thats just me. Lemonis youre inside of my business. And youre criticizing vendors that are on my shelf. If anybody would be creating some fake illusion, it wouldnt be those folks. It would be max. Thats what she does best. Lemonis do you guys think theres a lot of opportunity for new products for pet care . Stephanie definitely, because, like you can see, theres just one shampoo for a cat. Lemonis we can create a whole line of products that would be greatsmelling and natural. Max um, i would like to have a quiet word. Do you mind if we have a quick chat . Lemonis suddenly, max said she had something she wanted to talk about, which i thought was a little bizarre. We can just grab a seat over here. Max my concern is that your focus is solely on best in show and that youre not that interested in murchisonhume because of the low evaluation that you gave it. Lemonis excuse me. Did i miss something . Did she just tell me that im too focused on the best in show brand while ive been revamping and busting my butt trying to fix the murchisonhume brand . Am i missing something . So, my offer was 250,000 for 30 , right . Max um, we dont feel great about that. We feel like its low. Lemonis uhhuh. So when you agreed to the deal, you agreed to it, and then changed your mind after . Max if you want 30 of this company, we feel like we deserve more because were worth more. Lemonis let me understand this. We had a handshake deal for 250,000. Now you want to change the terms . So whats the counter . Max you get 15 for your initial investment and then another 15 when you execute and actually drive that price down. Lemonis so itd be like a report card. And, therefore i would be granted, like an employee, my extra options. Excuse me, but im not on audition. This is not a tryout. Maybe youll think about giving me an extra 15 . Im not your employee. This isnt a bonus program. Max you dont feel like you need to prove yourself. Lemonis no. I dont feel like i need to prove myself. Max you know what it is . I guess because we dont know you. Lemonis i hate being a generous, nice person and then feeling like people dont think that that was a fair offer. Max i dont see why its a big deal. Lemonis you need to cut the [bleep] max [ chuckling ] um. Lemonis you shook my hand. You cant honor that deal. Max that was a lot. Lemonis that was a lot . Max yeah. Will you excuse me . Lemonis sure. Max god. Lemonis if your business log on to theprofitcasting. Com. I used to book my hotel room on those traalways a catch. Here was like somehow you wind up getting less. But now that i book at hilton. Com, and i get all these great perks. I got to select my room from the floor plan. Very nice. I know, im good at picking stuff. Free wifi. Laptop by the pool is a bold choice. And the price match guarantee. How do you know all of this . Are you like some magical hilton fairy . Its just here on the hilton app. Just available to the public, so. Book at hilton. Com and get the hilton price match guarantee. 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Max im sorry that youre offended. Just lemonis so, where i am now is that the counterproposal is not acceptable. Id like to help you get your warehouse moved. Id like to help you get the packaging redone cause i think it would help you. Max but you know what im gonna say right now, right . Lemonis youre gonna say you have to go talk to peter. Max thats right. I do. Lemonis max needs to go back and talk to peter. And quite frankly, i dont care what they talk about. We had a very clear understanding of what the deal is. And next time i go to l. A. , were gonna make sure we get it settled. Ill see ya. Max goodbye. Oh, my god. What a dick. Did you want to talk to pete and i still, or we were okay. Lemonis i do. Im back in l. A. , and i wanted to meet with max and peter and find out exactly where we stand. Max should we look at our factory . We really couldnt afford to keep shipping from dallas. Were shipping all directtoconsumer. Lemonis out of right here . Max downstairs. Lemonis thats a bad idea. I walked in there thinking that max and peter and i were gonna sit down and iron things out. But what i walked into was a mini Distribution Center, something that i originally said no to. Was part of the reason that you did this space here as a contingency plan because you didnt know what was ultimately gonna happen with our deal . Max yes. Peter but there was also a practical side to it. Lemonis well, this is not practical. This is a really bad idea. It doesnt make sense to me why max would go ahead and open up this mini Distribution Center and why she thinks shes gonna be able to fill her orders out of this one room. I dont care if its just online or all of the orders. It just doesnt make any sense to me. Max i mean, this is not a big deal. Honestly lemonis not a big deal to you. This is, like, the moment of truth. If we want to move forward. Max yes. Lemonis . Were gonna shake on it again. And its got to mean something. What would you like to do, peter . Peter the value that you can bring to the business, wed be willing to accept the original deal. Lemonis what would you like to do . Max i would like to honor the original deal. Lets do it. Lemonis nice warehouse. Max shut up. It could be. Lemonis so, after our little hiccup, were back to work. After a long negotiation with the 3pl provider in dallas, we were finally able to move all of the product to visual pak in chicago. The product is made in chicago and then shipped from chicago. Thatll now save us 50 cents on every product we make. Now we have to count it all, put it in inventory, and put a process in place. So how much is actually here . Max its about 33 pallets, so not the 120 that we thought. Lemonis so youre telling me you dont have 280,000 of inventory . Max no. Lemonis how much is actually in inventory . Max like 70,000. Lemonis but i made a deal based on this information. Max sorry . Lemonis the inventory difference between 70,000 and 280,000 is gigantic. The fact that max is flippant about it is mindboggling to me. Max i want to eyeball it over there. Lemonis lets do that. Max lets do that first before we freak out. Lemonis my investment of 250,000 presupposed that there was a best in show trademark and there were assets of 280,000 of inventory. This doesnt work. Max so, its 33 pallets times 130 boxes per. Lemonis so 130 times 33 is 4,290 boxes. And theres 6 items per box. Max yep. Lemonis thats 26,730 bottles. And whats the average cost of goods . Max cost is about 1. 79. Lemonis so 26,730 times 1. 79 is 47,846. Thats even worse than 70,000. For exclusives, extras, and business advice, visit theprofit. Cnbc. Com. Tthe new Samsung Galaxy note 10 with the powerful s pen has arrived at sprint. And you get it for 50 off when you switch. Yup. That means less than 20 per month. So what are you waiting for . For people with hearing loss, visit sprintrelay. Com during the model year clearance sale. Save up to 2500 on remaining 2019 tracker and sun tracker boats. Save up to 3500 on tahoe; up to 4500 on regency; and save up to 5000 on remaining nitro boats. Plus act now and youll save 1,000s more compared to 2020 models. Hurry to Bass Pro Shops,cabelas, and tracker boating centers nationwide. Ahh now thats crisp. Crisp taste. Brewed with no corn syrup. Bud light. Weveryone, looknk isntat your phones. The design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. Max cost is about 1. 79. Cost of goods . Lemonis so 26,730 times 1. 79 is 47,846. Thats even worse than 70,000. Inventory was way off. Max crazy lemonis and its just not okay with me. Max we are trying to figure it out. Lemonis throughout my time here, i feel like max has tried to distort reality for me. But the numbers dont lie. Theres no way to sugarcoat or shake and bake your way out of this. If the inventory really isnt 280,000, the deal really isnt gonna be for 250,000. Look. This is obviously gonna be a problem. And somethings gonna have to give. Max oh, this is from kathleen. Lemonis rather than making any rash decisions, i wanted to give max a chance to actually get her act together and figure out where the inventory really was. I gave her a good, solid week. So i headed back to l. A. To figure out if were doing the deal or not. Can we chat in here . Max yes. Okay, so, what are we doing today . Lemonis so, where are we on the actual inventory balance . Max we havent resolved it yet. We think that it was sold. Lemonis when . Max between the time that we first started talking and the time that we were in the warehouse, so. Lemonis hundreds of thousands of dollars more . Max were not sure. Lemonis when i looked at the Balance Sheet and the numbers you provided, it was 280,000. I know that what we saw at the warehouse in chicago wasnt even 50,000 worth of stuff. Max right. Lemonis so thats a 230,000 difference. Max mmhmm. Lemonis if you sold 230,000 of inventory at cost, then there would be 250,000 in the bank. And theres probably like 250 in the bank. Max im you know im not the right person to discuss this with. Lemonis well, youre the owner of the business. I dont know who the right woman is. Max i understand. Lemonis what the hells our inventory . The reason that i let stuff sit for a week and didnt ask you about the inventory is cause i wanted to give you a chance to, like, figure it out. I feel like a week later, the answers kind of the same. Max yeah. I agree. Lemonis you agree that its the same. Max i agree its the same. Lemonis unbelievable. Max still doesnt have any idea what the inventory is. And i think what bothers me more is it doesnt even look like shes made the effort to figure out what it is. So, i asked you in the warehouse. Now that the inventory is different than both of us thought, what do we do . Max i would wait and find out what the actuals are. Lemonis but i did wait. Its a week later. You could have hired somebody. It just didnt become important enough. Max i understand. Lemonis well, do you, though . Max yes, of course. Lemonis the inventorys not there. And she doesnt seem to be remorseful about it or apologetic about it. Shes almost like, yeah. Thats what it is. Well, max, its not enough. You fought me along the way. You manipulated things at the Container Store. You ended up putting this, uh, warehouse downstairs. I was able to work through thinking, okay, well figure out the opportunity. Its so lost on me that the ceo of the business isnt, like, fivealarm fire. Max i understand. Lemonis did the people that work here steal from it . Max i dont have a satisfactory answer for you. Lemonis yeah. I was able to deal with us learning how to adjust to each other. But i cant deal with the fact that the difference in inventory isnt a bigger deal to you. If i really just take a step back, and i think about how complex your and my working relationship has been and how its frustrated you and definitely frustrated me, and then i come down to this asset value being just way off, i just i just dont see it as a fit. Max well, i appreciate your candor. Lemonis im very sorry. Max i am, too. Lemonis i wish you a lot of luck. Max thank you. Lemonis thank you. Max bye. Come on, zeusy. Lemonis max wants to play the role of an upscale Business Owner. But she doesnt want to deal with all the things that it actually takes to be a Business Owner like knowing your numbers and managing your inventory and working on the brand and driving costs down and improving margins and selling more. I was exhausted from her illusions. I was exhausted from her facades. I was exhausted from her flippant attitude. And at this point, i just had deal fatigue. And im not paying that fee anymore. Mary ellen thats pretty. I like that. Lemonis . A family has sunk their life savings into their swimwear company. I leave here inspired by your story. Only to find themselves out to sea. I mean, you guys are, essentially, out of business right now. Thats a lot of pressure on you. Theres no clear leader. Charlie ive kind of run the show. Mary lou no. Mary ellen [ scoffs ] lemonis . No design process in place. Charlie i just dont have the time. Chuck no, you did. You did. You absolutely did. Lemonis . And now, theres no money left either. Mary ellen they have put their finances into running this company. I dont want to see you guys lose everything. Mary lou i dont want you to worry about me. Lemonis if i cant help them swim with style, it wont be long before they go under. Mary lou im afraid. Lemonis listen, listen