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. Kathleen the filling is 35 cents. The box is 6 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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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 thr