Mike if i was going to go out and pitch this right now, it would be a very detailed plan. It wouldnt be anything like this. Lemonis im marcus lemonis, and i risk my own money to help businesses. I love investing in american businesses. Woman people are here because i care. Lemonis its not always easy, but i do it to create jobs, and i do it to make money. Do we have a deal . Lets rock and roll. Man yeah lemonis this is the profit. Hatbox is a local hat store in downtown austin and it specializes in any kind of hat. Literally any kind of hat that you can think of. Now, we know that the accessory business is a fast growing business but to have a whole business just on hats i was intrigued by it. Jaron hi. How are you . Lemonis hey, good. How are you . Jaron im jaron. Lemonis jaron . Jaron yes, sir. Lemonis nice to meet you. I love your hat. Jaron thank you. Lemonis this place is bigger than i thought it was going to be. Got to love hats if you work here right . Jaron yes, you do. Lemonis i felt like i was on main street in disney world and i walked into one of the, like, attractions, and i was greeted by a guy who looked like he was from the 1950s. Ill give them credit for one thing for sure. They live the lifestyle. How many different types of hats do you have here . Jaron im not sure. This morning actually, we got in a shipment of like 42 boxes of stuff. Lemonis how are you . Lauri im well thank you. Lemonis im marcus. Lauri good to see you. Lemonis nice to meet you. What is your name . Lauri im lauri turner. Lemonis lauri, nice to meet you. How many different hats are in here . Lauri all of them. Lemonis no, but how many different kinds. Lauri lots. Lemonis when did lots become a financial or a quantitative term . Lots of hats . Okay. I mean, is there 1,000, 2,000, 3,000, 4,000 . Nope, just lots. Lots, okay. Now, are these mens or ladies . Lauri both. Lemonis are most hats are unisex . Lauri all hats are unisex except for ladies hats. Its not your color either. Now, to me, thats not necessarily. Lemonis doesnt fit my fat head though. Lauri nope. You have a significant sized cranium. Lemonis i have a what . Lauri significant sized cranium. Lemonis you mean i have a big head . Lauri above average. Lemonis above average. Okay. The one thing that i was looking for in this process is the Product Knowledge that differentiated them from any other company that could sell hats. If youre going to have a business specifically about hats, your Product Knowledge and your ability to assess the customer, put the right thing on them, well, its paramount. And whats down here . Lauri these are flat caps. Lemonis ive seen sam jackson. Doesnt he wear his hat this way . Lauri yeah, thats this one. With a kangaroo. Lemonis he wears it backwards . Lauri mmhmm. Lemonis did i put this on right . Lauri yes. Ill show you what i think will look good. Lemonis okay. Do you like it . Lauri i do. Lemonis when people walk in, do you know exactly what kind of hat youre going to put on them when you see them . Lauri yes. So these are all handmade hats from milliners all over the world. This is Kate Middletons milliner from the u. K. I actually have to work with fish and game to bring in these feathers. Lemonis really . Lauri mmhmm. And this room is our White Glove Service so none of the oils transfer to the hats. Lemonis i did like the idea that she had this white glove room, and it was a place where you can go get these higherend hats that were one of a kind that may have some history or something technically cool about them, and that she understood the need to separate the average stuff from the great stuff. Much like you would put the finest jewelry in the safe and not in the case. So when you look at a hat like this lauri this is a stetson. Lemonis 228. Lauri not bad for a handmade hat. Lemonis what does Something Like this cost you . Lauri oh, about 90. Lemonis so whats your markup . Lauri i would say a good average, for handmade, 2. 75. Lemonis 2. 75 markup. So i want to explain what 2. 75 means. Essentially you take the cost of a product and you multiply it times 2. 75. In the retail business, theres usually a term of 2. 2 to 2. 7 that people will mark things up. Obviously the higher the markup, the higher the margin. But you have to really understand that as you mark those things up, people can shop them. In her particular business, what i liked about it, theres different sizes, different colors, different manufacturers, and the variability of all the different options gives this company the ability to maximize margin because its not easily shopped. Thats something that i really honed in on. How long has this store been here . Lauri in this location . Lemonis yeah. Lauri a year in september. Lemonis so you were somewhere else before . Lauri well, weve actually moved five times in the last two years. Lemonis uhhuh. So take me back. So one store now, but at the peak, how many stores did you have . Lauri three. Three. Lemonis and they were all in austin . Lauri mmhmm. Lemonis when did the first store open . Lauri 1999. Lemonis okay. How many times have you moved since 1999 . Lauri 16 plus five, i think. Lemonis youve moved 21 times . Lauri oh, yeah. Lemonis how do you establish a Customer Base and hold on to them if every time that customer comes back for a new hat youre gone . Today, theres email and Digital Marketing and theres ways to communicate with people that is far more robust, and so as you look at the fact that she existed since 1999, ton of credit. Been in the business for a long time, tons of experience. You look at the problem with the business. It looks wildly unstable. Lauri back here, this is inventory. This is the way back. This is backstock, and then this is our way, way back which is full of glass and fixtures. Lemonis what is all this stuff . Lauri the glass came from the domain store. Lemonis whats the domain . Lauri another closeddown store. I put like 250,000 into the domain store. The cash wrap, which was i think, like, 30 grand took four years to make that. Lemonis a cash wrap is essentially a piece of furniture that a customer would actually check out at. Probably should cost a couple grand. She spent 30,000. Where did you get all the money to do all this . You put 250,000 in one store. You got to sell a lot of damn hats. Lauri i put my house up. Lemonis she put a mortgage or a second lien on her house. Essentially a line of credit that allowed her to pull the equity out of her house and put it into the business. The challenge is if the business doesnt work, well, the house still has the loan. It does prove to me though that shes really committed to the business. Any time somebody puts their domicile, the place that they live in, at risk for their business. I dont know if there is anymore skin in the game than that. Lauri but what happened at the domain is hard to talk about. [ clears throat ] no a c in texas. Facing the full sun, 80 degrees inside with 80 humidity for five years. I couldnt even work there the last two years. Did i mention menopause and what thats like . Lemonis im not familiar with how that works. Lauri its horrible. Remember those old heaters when we were kids that were in the wall and theres a dial and you heat it . Lemonis sure. Lauri menopause is kind of like that, but somebody took the knob. Oh, its horrible. Lemonis okay. Lauri you cant put a women in menopause in humidity and expect her to sell hats. Lemonis in terms of having a filter, does she understand how that works . Can we go see the cash wrap that you paid 30 grand for . Lauri yes. Lemonis lets go see that. Lauri i have asymmetrical compound curves design. Lemonis okay. Lauri . Based on some of my measurements. Lemonis perfect. Lauri its sapele, african hardware. You can see where its splitting from the humidity up there, but since its been here its healing. This is components that are separate kind of like a puzzle. Lemonis so you spent. You spent 30,000 to build the checkout stand . Lauri well, you know why . I always wanted a nice cash wrap, so for the expansion i got what i wanted. And if i die, ill be buried in it or burned up in it is how i look at that. Lemonis what i was trying to figure out is how do i bottle up her knowledge and her quirkiness with some sort of normal commerce . I did start to think to myself, like, whats it going to be like to do business with somebody that spent 30 grand on a cash wrap and moved 21 times . Whats their decisionmaking process like . Lauri if i saw that hat walking by outside, id offer to fix it. I never approved it. At hatbox, we do things my way. Lauri i always wanted a nice cash wrap, its versus the other guys. Eese cheering clearly, velveeta melts creamier the wait is over. Tmobile is lighting up 5g nationwide. While some 5g signals go only blocks, tmobile 5g goes miles. Beyond the big cities to the small towns. To the people. Now, millions of americans can have access to 5g on tmobile. And this is just the beginning. Tmobile, the first and only nationwide 5g network. We ordered 10,000 units. That sounds good. Pretty cool, huh . Theyre speaking to mom in japanese, and mom hears them in english. Can you understand me . Yes, i can understand you. Okay. I have a lot of questions. How do you guys fly . What does santa do in the summer . Is mrs. Claus a good cook . Do you guys get presents . Can you roller skate or ice skate . So for the expansion i got what i wanted. And if i die, ill be buried in it or burned up in it. Lemonis i still want to know where was she going to go . Into a drawer . Lauri most people that come in, 9 times out of 10, if theyre not an established customer, were going to hear this i cant wear hats. But when you work with a professionally trained, classically trained haberdasher. Lemonis i cant take myself seriously in this hat. You know i look like columbo there, right . Or dick tracy. Who trained all these folks . You did . Lauri of course. Lemonis and how long is the training . Lauri six weeks and youve got i dont mind turning you loose on. Lemonis meaning you cant hit the floor and sell until youve gone through some serious training . Lauri oh, no, no. Lemonis i like the fact that lauri takes her craft so seriously, and she understands the importance of bringing employees on board and making sure that they really understand how to build value in the hat. She values Product Knowledge and training. Lauri if you notice people Walking Around austin and their hat looks right its not a chain store hat, its classically fit. Lemonis no, im not a hat wearer, but i do like the business idea of hats and the fact that she had hatbox. Com really gave me this belief that this could be much larger than a single store location. How you doing . Im marcus. Silas good. Im silas. Wonderful to meet you. Lemonis silas, nice to meet you. I have to tell you something. Your suit is rocking. Silas thank you. Lemonis you tailored it yourself . Silas yeah. Lemonis and so do you normally dress like this, or is it part of the uniform, part of the feel of the store . Silas no, i normally dress like this. Lemonis you do . Silas yeah. Lemonis very cool. Silas like as far as hats go, inherited hats young from, like, my dad, grandpa, and greatgrandpa. Lemonis in order for people to get an experience, you really have to live the lifestyle. I like the fact that silas had a lineage to hats and there was some history for him, and he really believes in the lifestyle, believes in the hat itself, and that shows me that shes hiring good people and the people that work there are really committed to what theyre doing. Silas i think youre probably a 7 1 4, 7 3 8. Lemonis i dont know, man. Im going to let you tell me. Silas so this is 7 1 8. Lemonis no. Silas too small . Lemonis yep. Silas 7 3 8. Sitting but a little large. Lemonis okay. Silas so i think you would be like a 7 1 4 long oval. We are out of 7 1 4. Lemonis okay. Silas but i can size this to make it work perfectly fine. Lemonis so lets do that. Im excited. Silas cool. All right. Lemonis what does the steaming do . Silas this warms it up so that you can shape it better. Becomes more malleable. Lemonis so that it can adjust so it fits my head. Silas yeah, yeah. Lemonis in todays day and age, particularly with retail being as tough as it is, you have to be able to communicate to the masses some experience that differentiates you from everybody else. The fact that hes got this oldschool steamer and hes moving it around. Thats something that if i saw it on instagram, i may want to check the place out. Silas im going to open up the front pan a little bit just to kind of match your jaw line here. Lemonis my fat face. Yeah, i got it. So youre really looking at the person thats here. As youre doing that youre thinking, what am i going to adjust . What am i going to steam . How am i going to make it fit their face . Silas yeah. And a lot of it is personality. So, like, you kind of read people a little bit. Lemonis i mean, literally youre changing the entire shape of it. Silas yeah, yeah, yeah. Were going to work on the shape a little bit. Lemonis okay. Silas i put a little this is lemonis little dimple in it . Silas yeah, when theres two its called a snake bite. And so i put one in there. Its just asymmetrical. Its kind of a conversation starter but not too much in the front. And then i brought this. I put a mule kick in back just to lower the back of the crown a little bit. Lemonis the amount of Product Knowledge that he has is almost overwhelming for me. It really is a very specialized craft that makes it difficult for other people to compete with, which may make it a good investment. That fits way better. Silas right . You feel it taking up a little bit of space in the back . Lemonis yep. Totally different. Silas and give me a rocker. Lemonis it actually feels like its my hat now. Silas yeah. Ill do one more thing for you. Lemonis ill tell you something. I would pay a little extra to have something fitted because i would feel like it was customized for me. It has a perceived value. How much more would you pay for a particular product if you really believed that it was customized for you . 10 . 20 . And so that extra little time and labor that may cost a fraction would expand your margins dramatically. And so as you think about your own experience in your own business, anything you can do to raise the perceived value, whether its that experience, the packaging, the way you were greeted, the Product Knowledge, all it does is expand the margins on what could be perceived as a commoditized product. How do you compete with that . Like, if you opened up a hat store down the street, you better get these folks to help you. Im definitely a cowboy. Lauri heres the issue as i see it. Over the years, ive developed certain techniques such as the mule kick and the pontiac and things that i consider to be my signature shapes. What i saw in marcus hat that disturbed me was the dimple in the front. If i saw that hat walking by outside, id offer to fix it for someone. Ive never approved it, ive never seen it, and for it to go out and represent my signature line of hats, its emotional for me. At hatbox, we do things my way. Silas the dimple isnt one of our approved hat shapes . Lauri ive never seen it before. Silas ive seen it before. Lauri yeah . Silas yeah. To me it looks unique, but its work, its your work and your store, so ill just stick to your hat shapes. Lauri thank you. Lemonis sometimes an owner has to really walk the line between following the process that they train on and the Sales Associate Building Rapport with the customer, but as a bystander, as a customer watching this, and as a potential investor watching this, red flag number one. Lauri i dont want to limit your freedom. Lemonis but i do. Lauri . But i do. Lemonis lets just be honest. You got a ton of freedom as long as you dont do it the way you want to do it. Lauri too far. Yeah. Lemonis im not agreeing with you, by the way. And look, im just a spectator. What i can tell you as the consumer going through that experience with him, i was a pleased customer with my experience. I thought, in my opinion, i thought he represented the brand well. I thought he represented the store well. I thought he represented you very well, and hes very professional, and he looks amazingly professional. And he was able to take a bad situation of no size for me, and he was able to make Chicken Salad out of chicken [bleep] by the way, silas, you can come work with me anywhere because if youre going to put that level of dedication and genuineness into the customer experience, i dont care what youre selling. Hes just trying to serve the customer and hes walking the line between taking care of lauris customers and generating revenue and being scolded by her. Why dont we do this . Can you and i, lauri, lets go take a walk outside. Lauri okay. Lemonis okay . Lauri okay. All right. I can use some fresh oxygen. Lemonis lauri, you got to chill out. Lauri i know. Lemonis whats your deal . Lauri oh, why am i this way . How far back do you want to go . Lemonis if youre looking to take your business to the next level, log on to theprofitcasting. Com. Lemonis what youre deal . Look, its just like when i tell people abbe confident. Th geico. Stand up straight. And speak with purpose. Yeah . Go on, give it a practice run. Kelsey. Kelsey. Marriage . Oh. Okay. Look maybe you should just show her this beautiful Helzberg Diamond ring . Thats a better idea. Yeah, maybe not in the bathroom. Oooh oh my word geico. Its easy to switch and save. Creais back at red lobster. Ast with new creations to choose from; like rich, butterpoached Maine Lobster and crispy crabstuffed shrimp rangoon. How will you pick just 4 of 10 . It wont be easy. Better hurry in. I have moderate to severe pnow, theres skyrizi. Things are getting clearer, yeah i feel free to bare my skin yeah thats all me. Nothing and me go hand in hand nothing on my skin thats my new plan. Nothing is everything. Keep your skin clearer with skyrizi. 3 out of 4 people achieved 90 clearer skin at 4 months. Of those, nearly 9 out of 10 sustained it through 1 year. And skyrizi is 4 doses a year, after 2 starter doses. I see nothing in a different way and its my moment so i just gotta say nothing is everything skyrizi may increase your risk of infections and lower your ability to fight them. Before treatment your doctor should check you for infections and tuberculosis. Tell your doctor if you have an infection or symptoms such as fevers, sweats, chills, muscle aches or coughs, or if you plan to or recently received a vaccine. Nothing is everything ask your dermatologist about skyrizi. Lauri oh, why am i this way . How far back do you want to go . I have constellation, or complex, ptsd. Lemonis posttraumatic stress disorder. Lauri exactly. My life has been multiple consistent complex episodes of intense violence and trauma. Lemonis what are the examples . I need to know that. Lauri when the door was on sixth, i was held up at gunpoint five or six times. Last time, after katrina, i had a knife at my throat for 45 minutes. So, things outside my ability to control the situation are internally disruptive for me. But i get revved up. So im a complex posttraumatic stress disorder survivor. Lemonis i have unbelievable sympathy for everything that youve gone through, however it doesnt give you permission to look at me it doesnt give you permission to rattle people because you were rattled. Lauri am i doing that . Lemonis you did it in there a little bit. Out of all the businesses ive ever been involved with, i had never experienced something this deep and this real, and i didnt know it going into it. These things that lauri is telling me definitely shed a lot of light on how she reacts to things, and i dont want to pass any judgement on what she went through. I couldnt even imagine going through what she went through. But it is important, once you become a business owner, that you dont wear all of that on your sleeve and take it out on the people that work there. So what i thought we could is go over the financials together. Lauri im a Broad Strokes vision kind of creative person. Lemonis mmhmm. Lauri and this is the underpinnings that make it happen. So my theology goes, do the best you can every day all day long and the numbers should. Lemonis work out . Yeah. One of the things that happened to me after being outside with her is that i felt that my approach changed. Now, we all know normally i wouldnt let somebody get away with saying, yeah, im not really paying attention to the numbers. Its not that big of a deal. It was almost like i walked back into the store and there were egg shells everywhere, and i didnt want to step in the wrong place or do anything that would create any level of uncomfortableness for her. In 2012 you did 944,000 of business and you made 19,000. Lot of business, not a lot of profit. 2013, you did 884,000 and lost 28,000. In 2014, you did 765,000. Lauri lost the flagship. Lemonis . And lost 14,000. So every year is going down about 100,000. In 2015, you did 489,000. A huge drop, so every year since 2012 its gone down. So you havent made money for years. Lauri its been awhile. Lemonis and every year the revenue is dropping. So is one to believe that the concept is a dying concept . Lauri not at all. This is all circumstantial. Annetta the chain store opened. Lemonis close to here . Lauri its one mile from here. Lemonis and what kind of store is it . Lauri its a chain store hat store. Lemonis you think they purposely did that . Lauri oh, yeah, absolutely. Annetta yes. Lemonis do you think their intention was to squeeze out the little guy . Lauri absolutely. No doubt. Lemonis the National Chain store that shes referring to is goorin bros. That has opened Stores Across the country, and they specialize in mens and womens hats of all shapes and sizes, but they have a very consistent rollout model of the way their stores look and the training and the experience, and its clear to me that they have literally taken a chunk out of her business. As opposed to wanting to improve her business and do better and learn things, she almost felt a little like a victim. If you own a Business Today, and people open up next to you, well, you better get your act together or your business is going to close. Youre not a victim. Youre a competitor. This is business. What about the debt on the books . Payables, debt, is there a balance any sort of Balance Sheet of any kind . Annetta i could get you ive got a spreadsheet on payables, but its right at i think 75,000. Lauri 75,000. Annetta 72,000. Lemonis payables are 75,000 . What does it cost to operate the store . Payroll . Rent . Utilities . Lights . Everything . Annetta i would say its probably at 30,000. Lemonis okay, and what are your margins on your product . Lauri 60 . Lemonis there arent many businesses in america that cant make it on 60 margins, so it wasnt like she didnt have a Good Business model. As that revenue was declining, there was obviously less gross profit to go around. I wasnt concerned about the margins. I was concerned about the root reason why every year her revenue is dropping, and it isnt that the hat business has gone out of style. Its like saying sneakers went out of style. Its that she got beat at her own game. If your margins are 60 , right around 55,000 is what you have to generate just to break even, and so you got to do almost 2,000 a day. And how much are you doing a day now . Lauri [ clears throat ] probably an average of. Lemonis 1,000 . Annetta not even that. Lauri under. Maybe 850. Lemonis so you got to more than double the business just to break even. Lauri easy. Lemonis if she does 2,000 a day at 60 margins, shell have roughly 1,200 in gross profit. 1,200 in gross profit over 30 days is 36,000 in gross profit. Her operating expenses are 30,000 bucks. So shes got to hustle and grind it out to make money. I had a really nice day, and thank you so much. Lauri thank you. Annetta thank you, sir. Lemonis i appreciate everything. I had a really nice time today. Annetta thank you. Lemonis i really did. Annetta thank you for your time. Lemonis see you soon, brother. Be good. Silas have a nice night. Lemonis thank you. There are moments where i do the financial review and im ready to go right into negotiation because i understand exactly what i want to do, but as i walk out this door, i really start to think and take account for the idea that she was very fragile. And when you get into business with people and youre having to be aggressive to make changes, to have them look at things, you have to be stern, and i didnt feel comfortable that i could could exert myself the same way because of what i knew she had been through. And i was always going to be respectful. I worry that i just wouldnt be able to be effective. This next business that im going to show you is a business thats in park city, utah, and it was founded in 2010, and itd called ramp sports. They specialized in snowboards and skis. The active sports base is huge, and i knew the market was expanding rapidly, this active sports base. Theres this huge yeti made out of, i think, wood or something standing in front of the store. This facility almost looks like a giant log cabin. I wasnt sure if i was walking up into a retail store or a manufacturing facility. Lou hi. Lou sardella. Lemonis hey, lou. Im marcus lemonis. Lou may i call you marcus . Lemonis you may call me anything you want. Lou glad to meet you. Lemonis nice to meet you. You use all this . Lou i am the worst skier in the whole place. Lemonis no, no. I dont ski. Lou okay. I mean of the employees here. Lemonis you got upgraded a little bit. Ive learned that skiing is essentially one thing falling. So this facility is both retail and manufacturing . Lou mostly manufacturing, but it turns out we get a lot of walkin business. Lemonis they couldnt have opened a manufacturing facility in more expensive space in america. Were in park city, utah, which is not like lowrent district. What is your role here . Lou im chairman and a majority owner. Im an engineer by trade. Lemonis okay. Lou and i started a company, sun automation, and we are very successful. Lemonis when he mentioned sun automation, its clear to me that he is a successful entrepreneur. That was a very big engineering and automation business that he sold for a ton of money. And how much have you invested in this business . Lou 6 million. Lemonis im sorry . Lou 6 million. Lemonis what . Thats a lot of money. If your expertise, historically, is in Sales Management and sales, why are you struggling with that . For exclusives, extras, and business advice, visit theprofit. Cnbc. Com. Audreys on it. Eating right and staying active . On it audrey thinks shes doing all she can to manage her type 2 diabetes and heart disease, but is her treatment doing enough to lower her heart risk . [sfx crash of Football Players colliding offcamera. ] maybe not. Jardiance can reduce the risk of cardiovascular death for adults who also have known heart disease. So it could help save your life from a heart attack or stroke. And it lowers a1c. Jardiance can cause serious side effects including dehydration, genital yeast or urinary tract infections, and sudden kidney problems. Ketoacidosis is a serious side effect that may be fatal. A rare, but lifethreatening bacterial infection in the skin of the perineum could occur. 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And accessoriesphones for your mobile phone. Like this device to increase volume on your cell phone. phone ringing get details on this state Program Visit right now or call during business hours. Lou 6 million. Lemonis im sorry . Lou 6 million. Lemonis that includes the building . Lou no, it does not include the building. Probably got 1. 9 million into the building. Lemonis so you have close to 8 million in this venture . Lou if you include the building, yes. Lemonis wow. Lou a little bit deeper than i thought i would get in. Lemonis he has close to 8 million invested in this, and so in terms of having credibility with me, it was 8 million worth of credibility. This guy had put his hardearned money on the line for this kind of business. How many total shareholders . Lou 22, 23, Something Like that. Lemonis what is your percentage . Lou 64 . Lemonis and then the next biggest shareholder . Lou is mike. Lemonis oh, okay. How you doing, mike . Mike welcome to ramp. Lemonis thank you. So is this your brain child . All this stuff that i see here . Mike yeah. Lemonis these are beautiful. I mean, theyre almost pieces of art. Mike we think they are pieces of art. Lemonis it seems to me like the artwork is so fantastic that this imagery could be used on product extensions i would think. Mike yeah. I think if your a company who becomes cool in hard goods, then you can leverage that into lots of other things. Lemonis a good example of a company that becomes good at hard goods can create the line extensions in soft goods is a company like burton. And burton is the largest manufacturer of snowboards today, but theyve really expanded their business and grown their top line by creating soft goods thats essentially apparel. But they had to build credibility inside of that community by creating a good snowboard first. I think what mike is trying to do is mimic that model. How did you come up with the idea . Mike well, i had worked for another ski company, rossignol skis. Lemonis okay. Mike Vice President of sales and marketing. But i had this other idea that, you know, the consumer would be a lot more excited to have more accessibility to the company so that they buy from it. Lemonis so when you say accessibility, do you mean. Mike buy direct. Lemonis online . Mike yep. Lemonis and how much total revenue do you do . Mike this year we were right about 900,000 in sales. Lemonis and then on that 900,000, how positive is your cash flow . Mike its not yet. Lemonis my First Impression of mike was that he was a little flippant about the amount of money that had been invested. It was almost like it was comfortable for him. It was like, yeah, that guy has invested 6 million. Yeah, yeah, we lose money. Its like, yeah, it is what it is because i dont have any money invested, so why should i care . And it scared me because i thought, holy crap. How much money is this business losing . Because the 8 million isnt going towards inventory because the sales dont justify it, so the only thing it could be going towards is the losses. You burn it, like, in a bonfire. So where did the 6. 6 million go . Mike building a new factory and a new process. Lemonis and how many years have you been in business. Mike weve had five seasons. Lemonis five seasons. Mike weve been growing about 70 , 80 every year. Lemonis let me be honest with you. If a company did 100,000 a year in revenue and the next year did 200,000, i understand thats 100 growth. But id rather you tell me that it grew by 100,000 because when you say to me 60 or 70 or 80 , it sounds like a big number unless the first number is a dollar. Can i get a tour . Mike of course. Lemonis thatd be great. As i walk through the factory, im really trying to understand where i believe the 6 million, 7 million was invested, and im almost keeping a mental note of every piece of equipment i see. I see cnc machines. I see rollers. I see ovens. I see lots of equipment, but i still havent seen even a million bucks. Mike so here we have Raw Materials like base material, top material, core material. Serious advantages to the bamboo. Better durability. Better performance. Lemonis and it differentiates you from other people . Mike right. But the actual material is about four times as hard. Lemonis the fact that youre using good bamboo, thats a big deal. Very tight process, and i have a lot of respect for that. Other snowboard companies that dont make an elite product may use pieces and parts of different kinds of woods and materials. He was using the best of the best. I just dont know if that was necessarily yielding them anything. How you doing . Are you evan . Evan yeah. Lemonis how you doing . Im marcus. Evan hands are a little lemonis who cares . Evan how are you . Lemonis nice to meet you. And, so, this is all the layers that i saw being made out there . Evan yeah. Lemonis and then it went in the oven, it came out, it cooled, and then they layered all those layers . Evan and they layered it in like this, vacuumed it off. [ machine whirring ] lemonis all right, we got two. Evan thats it. Lemonis how do you do the round edges . Evan jigsaw. You want to take the tops off . Lemonis yeah. Lets do that. That is pretty cool, brother. Evan yeah. Lemonis i dont think people have an appreciation for how much time and labor goes into making these. Evan its a big difference when you look at Something Like this like us small guys, and then the big guys where its just they put their ski in the machine and push go. Lemonis and how much equity do you own in the business . Mike 16 working for 120,000. Lemonis you work for 120,000 . Still a lot of money. Mike yeah, although it just covers my bills. Lemonis red flag number one how much equity do you have . I have 16 , and i only get paid 120,000 a year. As if 120,000 a year isnt a [bleep] ton of money. It felt very disrespectful to both the business and the guy who was actually paying him. See 120,000 a year. Company does 900,000 in sales. News flash youre taking home, for yourself, more than 10 of what the company does in sales. Mike and these guys are molding, and so doug is putting together a pair of skis by hand. Lemonis how you doing, doug . Doug good. How are you . Lemonis im marcus. Mike marcus, doug. Lemonis so this is fiberglass . Doug yeah. Lemonis kevlar . Doug kevlar. Then we have triaxial fiberglass which fills in between the edges of the skis. Mike so we use a resin that they call super sap, and its a more expensive resin, but its much cleaner to work with. So for every model, every size, we have to write a cnc program that cuts all of this stuff. Lemonis how are you . Im marcus. Polly marcus, im polly. Lemonis polly, nice to meet you. Polly yeah, nice to meet you. Lemonis do you come up with these designs . Polly yeah. Lemonis beautiful. You did this design . Polly yeah. Lemonis this really is just like a heat transfer, way to think about it, right . Polly yeah, i mean, our process is so versatile, you can really apply it to anything. Lemonis i give this young lady and the rest of the creative staff a lot of credit because im not a snowboarder or a skier, but the art that theyve applied to these products have made them really different, and the fact that you can customize the art for your own particular snowboard or ski is pretty cool. Thats a real differentiator. And so the way theyve set this model up is you can come up with your own design, or you can customize something with them, and theyll literally apply it right to your product. I would pay a premium for that. The problem in the business is not the quality or the manufacturing, its the fact that you make something that youre not selling enough of. The thing that im baffled by is, if your expertise, historically, is in Sales Management and sales, why are you struggling with that . Mike no, im spread incredibly thin. Lemonis okay, so thats the issue. Mike i am the Sales Department. Lemonis you cant be the Sales Department and the research and development and the engineering. Mike right. Lemonis you cant do it because something is going to give, and guess whats giving . Mike sales. Lemonis sales. How is he spread incredibly thin . Because if you look behind him, there are people everywhere. It isnt like hes making them and designing them. I still, to this day, dont know what he meant by he was spread thin. Lou what percentage of the business do you want for that . Lemonis 33 . Lou so, 50 to lose. Lemonis for you. Lou i dont like that. Lemonis i know. Lou i think i need a time out. Mike so this is the cost of the marketing plan. Why do wrinkles happen at the worst times . Showing up here here and even here . With new bounce rapid touch up spray, you can fight wrinkles anywhere. Spray smooth and youre fresh and ready to go wherever you are. New bounce rapid touch up spray. Bounce out wrinkles anywhere. We ordered 10,000 units. That sounds good. Pretty cool, huh . Theyre speaking to mom in japanese, and mom hears them in english. Can you understand me . Yes, i can understand you. Okay. I have a lot of questions. How do you guys fly . What does santa do in the summer . Is mrs. Claus a good cook . Do you guys get presents . Can you roller skate or ice skate . Wityour money almostes offered seems like its frozen. But not here. With capital one, you can open a new savings account in about 5 minutes and earn five times the national average. Open one from here. Or here in a capital one cafe. Plus, there are no fees or minimums on savings or checking accounts because thats how it should be. This is banking reimagined. Whats in your wallet . For a limited time, get a outb4course meal your holidays even better starting at 15. 99. Treat yourself to the perfect gift today, because the aussie 4course wont last long and now, get a 10 gift with every 50 in gift cards. Introducing a razor that works differently. The gillette skinguard. Designed with a guard between the blades that helps protect skin. It guards against razor burn on the neck and irritation on the face. Get the shave youve been waiting for. Gillette skinguard. Monis so whats your total budget for 15 for marketing . What i wanted to do is to start to get down into the details in their financials and start to hold mike accountable in front of lou for the nonsense that he was speaking. Mike Sports Marketing 206,000. Which is like athletes plus demo days and things like that. Lemonis whats this number here . Total marketing 649,000 . Mike well, its 6,000 more than last year. Weve been trying to get more aggressive with cutting on marketing, and lou and i dont see eye to eye on that. Lemonis you didnt cut at all. You actually went up, right . In theory. Mike well, i mean were trying to go up 80 in sales and our budget stayed virtually flat. To me, thats cutting. Lemonis it seems to me that as we dug into the numbers around marketing, that a good portion of their marketing was either going for endorsements to professional snowboards or activation. And activation is the term that Companies Use to bring their product to life in a live environment, and thats through demos or experiential marketing. Like a beer company would do at a football game. They would go out into the parking lots where the tailgaters are, and they would activate their brand, and so thats one of the things that ramp spent a lot of money on. Announcer ready to go. The fire dancer. Lets give her a big hand. Lemonis look, im all for any company that wants to create marketing that has activation behind it, but i want to understand the measured results. This is specifically inviting a core group of people, known customers or hope to be customers, to an event and then converting them to your product. Do they have conversion . Well, their sales dont show for it and neither does their bottom line. What financials do you have that i can look at. Mike this years budget, and this is next years budget plan. Lemonis this is your forecast, but where is the historical financials. Mike ill print them for you. Any investor or lender is always going to look at historicals because theyre going to take your forecast and theyre going to sensitize it. Mike right. Lemonis if you were out trying to raise money right now, what would you show somebody . Would you give them a book, or. Mike yeah, i mean, if i was going to go out in pitch this right now lemonis kind of like what youre doing right now . Mike yeah, kind of like that. It would be a very detailed plan. It wouldnt be anything like this. Lemonis when youre out raising money, the historical nature of your business is a jumpingoff point for an investor or a lender, and as you build the forecast of what youre going to do in the coming years, theyre going to look at the forecast and theyre going to measure it against the history saying, does it seem reasonable . Does it seem realistic . What do you think this business is worth today . Lou it depends if you got a Rearview Mirror or are you looking out the window . Lemonis no mirrors. You and i are just riding in the car, were looking at each other. Whats this business worth . Lou between 3 million and 9 million. Lemonis how did you come up with that . Lou i asked people to value it. Lemonis lou, youre a good guy. I dont know if you gave me 3 million to 9 million because you knew that that was so wide of a mouth of valuation that i wouldnt know where to stand. I dont know if youre hoping that somebody puts that value on it because thats the money youve invested, but for anybody out there that owns a Business Today that is looking to bring in new money, a valuation is going to be determined by the assets that you have, the cash flow that youre generating, or the Addressable Market that you look like youre penetrating. Im not getting good answers for any of those things. 2011, 287,000 in sales, lost 781,000. 2012, 299,000 in sales, lost 1,200,000. 2013, 456,000 in sales, lost 1,400,000. Mike we have a track record of growing 70 , 80 four times now. Lemonis i think you should stop telling me that. We have a track record of doing more business and losing more money. I think there is a black hole right now. Lou weve dug a big hole. Lemonis but i like the product. I dont think you could just make skis. I dont think you could just make snowboards. And just spending the day with you, you clearly know the ski snowboarding manufacturing process. Mike wow. Thank you. Lemonis so my offer is a Million Dollars. Let me be clear that i cant put a Million Dollars in at the bottom of the barrel. I just cant. Its too dangerous for me. I would want any money that comes in from this point forward to be more senior than anything else, including the money that you put in. Lou you put the money on the top, and you get paid first . Lemonis i get my money back first. The fact that lou put in 8 million, while im sympathetic to it, its irrelevant because we just learned as we went through every single year that the money has been burned. Im potentially investing in a business thats lost a ton of money, doesnt have a lot of inventory, the building isnt owned by the company, and its a giant black hole run by a guy who looks like he doesnt care. Lou how about if we both put a million and a quarter in . That gives us 2. 5 million. Lemonis so well put in 1,250,000 apiece . Is that what youre asking . Lou yeah. Lemonis and what am i getting for that . Whats my return . Lou whats your return . Lemonis how am i making money . Lou what percentage of the business do you want for that . Lemonis 33 . Lou what . Lemonis 33 . Lou thats a 50 to lose. Lemonis for you. Lou i dont like that. Lemonis i know. Lou im going forward. Id like something a little bit better than that. Lemonis this business was starting over. I mean, thats how i looked at it. Lou i think i need a time out. Lemonis im going to be in charge up here. I need to have full control of this. Lou the company is going down the tubes. Id like to take control back over, no . Lemonis youve done a good job up to this point of taking it down the tubes with mike. So chantix can help you quit slow turkey. Along with support, chantix is proven to help you quit. With chantix you can keep smoking at first and ease into quitting so when the day arrives, youll be more ready to kiss cigarettes goodbye. 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Lemonis i would want 33 . Lou thats a 50 to lose. Lemonis for you. Lou i dont like that. Lemonis i know. Here is the simplest way for me to think about it. Were saying 1,250,000 each. Ill put 1,251,000. This is the most senior. I get my money back first. And so im going to be in charge up here. I need to have full control of this. Lou youd get full control, but i would like to put a, you know, performance. In other words, the company is going down the tubes, id like to take control back, no . Lemonis youve done a good job up to this point of taking it down the tubes with mike. I felt really bad having to bang on lou in this particular situation because he was really the steward of this business in terms of putting money in, and i felt awkward holding him accountable for things that were missing when i should have been holding the only guy thats actually getting a check out of the company accountable. I should have just pounced on mike. Lou its not down the tubes. Its still here, you know. Lemonis because youre writing checks. Lou its lost a lot of money, weve dug a big hole, but weve built something, too. Lemonis you dont even have your financials in order. Lou if the company was making money, i wouldnt care of the financials were not in order. Lemonis if the company was making money, you probably wouldnt have called me here. Mike and what are the implications for me as far as trying to manage the company and manage sales . Lou the difference is youre going to end up with a different boss. Lemonis youre going to get fired. In the back of my mind, i really did believe that if i did that deal that mike probably wouldnt be there in a year. He was just complaining about getting 120,000 and seemed so disrespectful to lou that i was almost looking forward to throwing him out. 100 of my money is going to go towards generating sales, new distribution, new marketing ideas, some retail stores, some product expansion. Im looking to do something different. Mike no, it makes sense. Lemonis we have a deal . Lou okay, just so i understand it, you got control . Lemonis 100 of everything. 100 control. Lou are you okay with that, mike . Mike no. Lemonis he knew i was going to bust his ass. He knew that i wasnt going to accept his snarky comments and his knowitall attitude and his excuses. I wasnt going to accept it, and the minute he said, no, it was like, okay, nice meeting you guys. Thank you, guys. Over the period of the next couple of years, i traded some emails with lou, and ramp is out of Business Today. When you invest in a business, you have to base your decision on investing in people, and i think what lou miscalculated in this scenario is mike, and what i avoided in this scenario was mike. I think mike actually saved me a million bucks. Thank you, mike. Strud are you ready tonighfor a cool relation with the brand thats rockin the nation . Lemonis polar bear coolers has had tremendous success in the cooler industry. Strud in 2017, were 3. 5 million. Lemonis whoa strud were the pioneers of the soft performance cooler. Lemonis but due to poor inventory management. Strud i do not know how many black 12packs we have in stock. Lemonis you dont think thats a thing you should know . And terrible marketing. Cargill there is no way to purchase anything from this page. Lemonis . The company has suffered years of continued revenue loss. Its drop, drop, drop, drop. And to make matters worse, the owner doesnt respect his team. Hayden my salary was cut 55 overnight. Lemonis excuse me . Geoff when your house is worth nothing and your pay is cut by 10 grand, it changes your life