Transcripts For CNBC The Profit 20240713

You see . It flimsy. Dont ever make these again. You dont sell them. And create a few products. Juli it reduces anxiety and depression. Lemonis i kind of like it. I spent countless days working on these companies. How much money did you burn through . Parker 650,000. Lemonis but we cant always fit everything im thinking into the show. So tonight im giving you an inside look at an episode from season 5, tumbleweed tiny homes. I want to help you be a better c. E. O. Because right now, youre a nice man and a terrible c. E. O. You say you have everything on the line, i expect you to fully immerse yourself in the business, put yourself at risk. John that makes sense. Lemonis over the next hour, im gonna take you behind the scenes to share with you what i was actually thinking during filming. Ive agreed to invest 3 million, and i will be 100 in charge. This is probably one of the most aggressive transactions that ive ever done in the history of the show. John okay, good. Lemonis . And give you an honest assessment of my decisions. This business is upside down. It just sits with me in a very bad way. Amber you didnt want to run . Lemonis no, because at the end of the day, its on a path to something. My name is marcus lemonis, and this is an inside look at the profit. Man [ speaking indistinctly ] woman rolling. Lemonis now, the reason that i brought john on is because he has seen and experienced everything in the tinyhome world, except what ive gone through, and i know you have a lot of questions. John yeah. Lemonis are the questions gonna be like, why did i do a deal here . John maybe. No, no, well see. Lemonis oh, this is gonna be good. John alright. So many questions, lets start. Lemonis with my ownership in camping world, ive been in the rv space for over a decade now, and i feel that investing in tumbleweed would allow me to make a huge splash in the tinyhome market. Amber marcus, why were you interested in tiny homes . Was it because of the rv business . Lemonis no, i think i was mostly interested because i saw the parallel between my primary business, camping world. John what do you think the biggest difference between an rv and a tiny house is . Lemonis the quality of craftsmanship. John 100 . Lemonis that a tiny home is manufactured like a log cabin or like some sort of. John built like a house. Lemonis yeah. John its the same construction. Lemonis absent the frame, you would think a house was being built. John yeah. Steve hi. Lemonis im marcus. Steve im steve. Lemonis nice to meet you. Steve nice to meet you. Its so surreal actually seeing you in the face. Lemonis were here. Lets do it. What prompted you to get into this . Steve im a minimalist by trade. Lemonis do you live in a tiny home . Steve no, i live in a regular house now. Ive got a family and kids. I actually live in sonoma and in colorado. Lemonis what happened to, i want to be a minimalist. Steve i still am a minimalist. Lemonis yeah. Im a minimalist, but i have two homes, one of them in sonoma. I just wanted to clear that up. John i just love, you go, okay. Lemonis yeah. Im gonna bank that one, for sure. Play. What did you do before this . Steve i was a restaurateur. I really dont have much experience in manufacturing. I can manufacture a burger. Lemonis okay. Can you show me the models . Steve so we have the cypress, the farallon alta, the elm 26 equator. John those are nicelooking tiny homes. Lemonis its like a log cabin. John yeah. Lemonis but its movable. John yes. The one thing i noticed about all of these tumbleweed things that i dont particularly like is all that pine wood or that beetle kill wood. I mean, its, like, the whole thing looks exactly the same. To me, thats not interesting. I like to see brokenup materials. These feel like youre going to camp. Amber john, have you ever slept in a tiny home . John i have slept in a tiny home. Lemonis me too. John but embarrassingly, as many times as marcus has. Lemonis which is uno. Amber one time. John yeah. Steve they can pick their floor finish. They can pick their roof and window colors. People really want to get into these and customize them. Lemonis so what is your typical price for an average unit sold here . Steve right now, 80,000. John thats a good price, i think. Lemonis . Capacity that the factory can actually produce . Steve were currently producing anywhere from 8 to 10 a month, and we have about a 3 to 4 to 5month backlog at any given time. Lemonis 3 to 5month . Steve yes. Lemonis well, show me the shop. Steve yeah. Lemonis start to finish, how long will it take . Steve it should take 16 days. This one is probably gonna take us 21. People really want to customize these a lot, so we get curveballs all the time for things that weve never done before. Lemonis like . Steve like folding porches. We had no idea what that was gonna entail. Lemonis what did it cost you to make . Dont say you dont know. Steve our costs of labor and materials on one of these units is around 60 . Lemonis so your margins are 40 . Steve well, okay, so besides the cost of goods, theres probably about 10 additional costs in design, servicing, labor, sales. Lemonis your margins are 30 . Steve 30 . Lemonis do you think those are good . Steve i dont know if theyre good or bad. Lemonis pause. John yeah, now youre starting to realize. Is this the moment where youre like, oh, boy . Lemonis the thing that concerned me is that its sounding, initially, super inefficient. Like, i dont need to see the financials to know weve got a problem. John yeah. Youre like. Lemonis okay, maybe i. Maybe its lunch. Maybe its time to go. John yeah, totally. Lemonis the more i dig, the less i think he knows. You cant run a business that way. From sonoma. How are you . Im marcus. Brian im brian. Lemonis nice to meet you. Mason mason. Lemonis mason, nice to meet you. Where did you learn how to do this . Brian military. Lemonis youre in the military . Thank you for your service. Those are my kind of dudes right there. Lemonis im like, alright. I like these guys. If all the models that you guys make were Standard Units, how much quicker would the production process be . Mason significantly. Brian yeah. Lemonis double the output . Mason i would say so. Brian yeah. Lemonis how you doing, sir . Austin im austin baker. Lemonis hey, austin. Austin production manager out here. Lemonis so are you in charge of the floor . Austin yes, sir. Lemonis you want to give me a little tour, just you and i . Austin please. So im gonna show you the two types of trailers that we build on. We are fabricating our frames right here. Were building them. Lemonis youre not even buying them . Austin were building them. John yeah, this is crazy. Austin everything we can do, we do inhouse. We are so jammed, and its unnecessary. The word custom is sexy, and it sells. Lemonis it also does one other s. Austin ruins us. Lemonis slows things down. John see, i mean can i be honest . Were big proponents of what we do is really personalizing the space. What are the three or four things that really bring you happiness . Lemonis whatever it is. I think ultimately for me, the frustration that i had with the customization piece was really about if you just had 6 models, 8 models, 10 models, pick a number, and just said, these are the floor plans. These are the materials. Yes, you can change in and out tiles or floors or stains or cabinets or fabrics or whatever it may be. Its why chipotle works. John sure. Lemonis its mexican food 100 different ways, but its like, pick this, pick that, pick this and get the hell out. John sure, sure. Lemonis same concept. But when youve taken those ideas to steve, what does he say to you . Austin my ideas were shut down. He doesnt understand what we do out here yet. Hes a restaurant guy. Lemonis has he ever worked in the shop . Austin no, and thats okay. Thats not his job. Thats what he pays me to do. Lemonis its not okay. I believe that an owner of a business at some point needs to be integrated with his team. I dont expect it every day. Theres administrative things that have to happen. John sure. Lemonis but if your business is losing money and you know that the volume of production is part of the reason, and you know that you have a 3month backlog, which means the demand outpaces the supply, you and i would be like, okay. John yeah. Lemonis . How do we get one more out . John yeah. Lemonis just one more. Steve marcus, i wanted to introduce you to lee. Lee hi, marcus. Lemonis hi, lee, how are you, sir . What do you do here, lee . Lee c. O. O. Lemonis okay. Steve lee is brandnew. Hes been with us a week and a half. Lemonis and so how does the reporting structure work here . Austin so we have employee. Lemonis yup, one. Austin we have leads. Lemonis two. Austin we have the foreman. Lemonis three. Austin you have the production manager. Lemonis four. Austin then i have steven slosher, whos the gm. Lemonis five. Austin then thats his boss. Lemonis six. Austin whos his boss. Lemonis seven. Austin yeah. Lemonis so seven layers between you and the people that make the magic happen. Steve correct. Lemonis does that seem like a lot to you . Steve yes, it does. Lemonis how about to you . Lee no, it doesnt. The only redundancy that we might have is austin because. Lemonis meaning. Lee . You have a general manager, foreman. The foreman is over the two leads. Lemonis pause. Did you catch what he said . John the only redundancy is this guy right here. Lemonis the guy were standing right next to. Dick move. John what do you think that is . Lemonis its not knowing your audience, and as a leader into a new business. John boy. Lemonis . Even if you believed it to be true, if you and i were standing there, brandnew to the company, we wouldnt be like, yup, this guy right here. This guy has got to go. John i dont want to point any fingers, but this guy here. Lemonis it was clear to me that this guy didnt know how i think because that was maybe the worst opening because now im thinking to myself, okay, dude. Youre going. John i think maybe lee was trying to posture a little bit. Lemonis yeah, it didnt work. John just be true to yourself, kids. Thats the message. Lemonis thats right, and know your audience. John know your audience. Lemonis go ahead. How are you . Tracy im tracy. Lemonis tracy, nice to meet you. I just spent a little bit of time with austin. Tracy my husbands name is austin, yes. Lemonis oh, its your husband . Okay. So could you take me through the sales process . Like, if i want to order a certain type of floor. Tracy so youre basically asking for a customization. Lemonis yes, can that be done . Tracy if the Production Team says we can do it, im not walking away from the sale. Lemonis why . Tracy so we get 20 of the cash upfront. If i dont have a lot of cash customers for the month, those guys are struggling for materials. Lemonis so better said, you say yes to anything, especially if theyre a cash buyer. Tracy yes. Lemonis okay. Its become clear to me that every single unit that is bought from this company has some nuance to it that is slowing down the process. Tracy this house right here is a custom one. Lemonis i dont understand how youre getting upstairs. Austin but youll never see this in any other house. This was this lady. Lemonis how do you get up there . Austin shes gonna get a little stepstool right here. Lemonis so is there a disconnect between sales design and whats happening in the shop . Austin i cant blame sales because they have to make money. Lemonis i want to ask you a question. Does steve know what hes doing . Austin no. Lemonis does he know how to manage people . Austin no. Lemonis does he know how to design things . Austin no. Lemonis whos really running this company . Tracy hes running the outside, and im running the inside. Lemonis doesnt something have to change . Whats wrong . Austin so. Whats wrong . Lemonis talk to us. Tracy just that we love this place so much, and we love those people. These people are here because they care. Theyre not here because of this paycheck. I can promise you that. Lemonis the idea of being in the tinyhome business excites me. I mean, theres a good recipe there. It just needs some major tweaking. Whats the year been like for you . Bernadette we worked really hard. Lemonis how hard has this been on him . Bernadette incredibly difficult. Steve i have taken a huge risk just to get here today. Lemonis do the people that work here know how bad it is . Steve the top managers do. The rest dont. Lemonis and so if the business closes, what happens . Bernadette we start over from scratch, yeah. Lemonis what does that mean . You have to file bankruptcy . Bernadette about, like, a week away from that. Lemonis wow. In looking back, im not so sure how sincere they were. John hmm. Really . Lemonis you say you have everything on the line, i expect you to fully immerse yourself in your business and put yourself at risk. John that makes sense. Amber john, you had heard of tumbleweed, right . John yeah, absolutely. Amber whats their reputation in the business . John my impression was always oh, jay shafer, who kind of is credited with starting this tinyhouse movement, like, oh, he started tumbleweed, and then he left. Amber right. John so they had that sort of legacy brand name. Lemonis do you have jays number . Can he come back . So your total revenue for the last 12 months is 6. 9 million. Your gross profit is 2. 5 million. Your total expenses . Steve 2. 6. Lemonis and so then your net profit would be. Steve minus 100,000. Lemonis okay. Have you ever made money here . Steve yes. Lemonis what did you make in 12 . Steve about 100,000. Lemonis what did you make in 13 . Steve about 100,000. Lemonis what did you make in 14 . Steve 400,000. Lemonis what did you make in 15 . Steve in 15, we lost money. When we expanded, about 1. 1. Lemonis so 100,000, 100,000 and 400,000 is how much . Steve 600,000. Lemonis youre at a 600,000 positive. You lose a million one in 15. Steve mmhmm. Lemonis takes your 600,000 positive to a 500,000 negative. Steve well, there were no retained earnings, so these earnings were all taken out. Lemonis yeah, because you took it all. What do you mean they were taken out . Where did they go . Steve to me. Lemonis so you took all the money out of the business. And so at the start of 15, there was no money here. Steve yeah. John and youre thinking, this is a good investment. Lemonis total liability, 2,885,000 against assets of 1,239,000, and that means that your negative equity, this business is upside down, insolvent to the tune of 1. 6. Steve correct. Lemonis the debt is so significant. Really, it just sits with me in a very bad way. Amber can you explain what it means when a business is insolvent . Lemonis when a business is insolvent, it means that its liabilities. John can i get a notepad . I feel like i should. Im, like, in business school. No, i like this. This is good. Amber weve all gotten a business degree on this show. John i know. Lemonis so the insolvency in a business means that its liabilities, what it owes people, is greater than the assets that it has. So whether you have bank debt or payables or any sort of loan exceeds the amount of assets, which is cash, inventory and receivables, and theres really no way out of insolvency unless more capital goes in or debt thats on the books converts to equity. Amber right. Lemonis so when i look around this factory, how did all of this get funded . Steve so originally, customers were paying upfront. Lemonis so essentially, customers financed this whole business. Steve and also in addition, i put some money in. It was 1,500. Lemonis 1,500 bucks. Steve correct. John that look, i love that look. You go. Lemonis i just want you to know, i took out 600,000. John but i put some of it back lemonis . But when it got tough, i dug in my pocket, and i put in. John 1,500. Lemonis . 1,500. Where youre sitting today is in a business that, quite frankly, is out of business, and i have a real problem with the fact that you took 600,000 out of the business in a business thats growing. Why did you take it all out . Steve i didnt see this coming. I didnt know it was gonna happen. Lemonis who gives a [bleep] is this really a smoke and mirrors business . Steve no. We have a real product. Lemonis okay. Are you running a house of cards . Steve im running on the edge. This has me. Lemonis do you know what fakak means . Steve yes. Lemonis what does it mean . Steve it means all screwed up. Lemonis that doesnt scare you, does it . Steve curious as to why you say that. Lemonis because youre reckless about it, because you didnt save any acorns for the future. The fact that youre not scared of debt in one breath, but youve taken on debt like. This doesnt even, like, phase you. That freaks me out. Im willing to lend 3 million. This is really important. John okay, okay, okay. Alright. Lemonis . Because this is probably one of the most aggressive transactions that ive ever done in the history of the show. John okay. Good. Whoo. Lemonis how do you say your last name . Yeah, im married. Youd do that for me . Really . Yeah, id like that. Who are you talking to . Uh, its jake from state farm. Sounds like a really good deal. Jake from state farm at 3 in the morning . Who is this . Its jake from state farm. What are you wearing, jake from state farm . Uh. Khakis. Hey, do they ever ask you what youre wearing . Uh. Yeah. Red sweater, button down shirt. Like a good neighbor, state farm is there. Finding the right words can be tough. N it comes to autism, finding understanding doesnt have to be. Together, we can create a kinder, more inclusive world for the millions of people on the autism spectrum. Go to autismspeaks. Org tmobile has the first and only, nationwide 5g network. And with it, you can shape the future. Weve invested 30 billion dollars and built our new 5g network for businesses like yours. While some 5g signals only go a few blocks, tmobile 5g goes for miles. No other 5g signal goes farther or is more reliable in business. Tomorrow is in your hands. Partner with tmobile for business today. That little vent that wont stay its no big dopen. Really. Its not like the engine doesnt work. Just position the other vents so theyre aimed at you. Its no big deal. Except it is. That little vent that wont stay open. Is like a little window of your automotive happiness boarded shut. Thats why the vent is one more thing we check before a car can be a certified carmax car. Because thats the way it should be. Carmax. John weisbarth. Lemonis weisbarth. John yeah. How do you say your last name . Lemonis lemonis. John see . Easy. Lemonis but some people say lemonis and. John yeah. Amber lemonya. John ooh, lemonya. Oh, i like that. Lemonis how do people say your last name sometimes . John wheezebarth because the weis. Lemonis okay. I like that name. John great. I like. What did we call it . Amber perfect. Lemonya. John yeah, i like that name. Amber lemonade. Lemonis the fact that youre not scared of debt, that freaks me out. This doesnt even, like, phase you. Steve no, i completely understand what youre saying. Lemonis so you have a business thats 1. 6 million underwater, but the product is great. The people that work here are spectacular. Phenomenal. So im willing to lend this business 3 million to clean up the payables, the lenders. John this seems so fast to me. Lemonis . So that the employees can continue to work and so that the company can breathe. Steve yes. Lemonis in exchange for that, i want to be paid back, and i want 75 of the equity. John 75 . Lemonis okay. Amber pause, and you said lend, too. Lemonis no, but this is really important. John okay, okay, okay. Alright. Lemonis . Because this is probably one of the most aggressive transactions that ive ever done in the history of the show. John okay. Good. Whoo. Lemonis but i basically just told the guy is youve got a 7 million business. Youre 1. 6 underwater. I dont trust you, and so im willing to lend the company 3 million. The business is going to pay me back, and when it does, im still gonna own 75 of the business. John wow, thats. Yeah. Amber and how did you arrive at 3 million . Lemonis thats a great question. I arrived at 3 million because i wanted to take the 1. 6 that he was underwater and get it above water. John sure. Lemonis so clean up all the debt, and then i wanted to make sure there was sufficient working capital so that it didnt happen again, but remember that if i lend the business 3 million and i own 75 of it, who did i really lend the 3 million to . John so you lended it to yourself, i guess. Lemonis i lended it to myself. John see, thats smart. Lemonis well. John you know what . You should do a show about this stuff. Youve got a good brain. Lemonis play. Steve its certainly not the offer i was expecting. Lemonis what did you think the offer was gonna be . 2 million and i would sprinkle fairy dust in here . Steve and 51 . Lemonis i want to help you be a better c. E. O. Because right now, youre a nice man and a terrible c. E. O. C. E. O. Is not a title. Its a philosophy. John i like that line. Lemonis and so we have a deal . Steve yes. Thank you very much. Lemonis okay . Steve okay. John i mean, is he getting any counsel, or are you just like, boom, there it is, and done . Lemonis hey, guys. We need everybody together right here. John you like this moment. Lemonis love it. Amber its his favorite part. Lemonis i have agreed to invest 3 million, and i will be 100 in charge. Now, the challenge is, in my opinion, we have to standardize this process to really start to crank things out. We will have four standard models, and thats it. Okay . So were gonna flatten out the organization, and were gonna be a team. Alright. Lets get to work. John how many cameras do you have there . Lemonis two. John its good work. Lemonis alrighty. I want to spend the evening overnight in a tumbleweed tiny home. Amber why did you want to do this . Lemonis i wanted to be able to go back to the floor with the guys and gals that work there and say, first of all, your work is awesome. John yeah. Lemonis second of all, whos got ideas about how to make it better because ive got a few because i slept in it last night . John yeah. Lemonis i feel like you have to at least give respect to the work and the lifestyle. John youve got to walk in their shoes just a little bit. At least see what it feels like. Lemonis plus i was kind of excited. I felt like i was going to summer camp. John it is. Lemonis when i went inside the unit, what was most interesting to me was how space gets utilized. John thats everything. Lemonis this isnt well thought out. Furniture is in the way. I wish this furniture was integrated. This window is too small. No collapsible tables. I think their use of space is not really great. Get my fat ass up here. Its actually kind of cool. What i felt what missing from the unit is Little Things that we have become accustomed to having in our homes. John i dont like all that wood. I know i keep saying it. Too much. Steve good morning. Lemonis good morning. Steve how did you sleep . Lemonis i didnt sleep bad. I like the fact that there was a very homey feel to it. I like the pitch of the roof. I didnt feel claustrophobic. As i think about this place, theres a number of design changes that i would make. Its that i look for little creature features, and so i thought about, like, where do i charge my phone at night . So have you really slept in one . Steve i have. Lemonis overnight . Steve overnight. Lemonis how many times . Steve ive slept in one in sonoma. John were all tied. Lemonis yeah, yeah, no, pause. Amber pause. Lemonis thats this dudes business. John i know. Lemonis and i didnt want to be tied with him, and the fact that he wasnt unbelievably versed on this company. John that is strange to me. Lemonis it wasnt looking great for him. John no. Woman we need some more storage. Lemonis in order for us to start designing the standard model, were gonna have to get feedback from customers, so im taking a unit and the team over to camping world in colorado springs. Steve alright, folks. I want to hear some feedback about what creature features this is missing and what other changes you would like to see. Man i would give it more Storage Space. I didnt see much cupboard space or Storage Space in the unit. Lemonis okay. John Everyone Wants Storage Space. Lemonis is that a big deal . John totally. Young woman pull out and it will just be there as a piece of furniture. Lemonis thanks, folks, very much for talking to us. Woman 2 thank you. Lemonis since austin is in charge of overseeing the production of the tiny homes, i wanted to show him some features and benefits from rvs here at the dealership. All of this furniture is integrated. This table could extend, but its part of the place, and i think the thing thats missing in the tiny homes is the lack of integrated stuff. John which i was surprised they didnt have more of. Lemonis that was probably the one thing that i was most surprised about, and i wanted them to understand that the rv industry, the way that the manufacturers have thought about how to use space. John its no wasted space. Boats and rvs, you can learn a lot from. Lemonis i agree. John thats what informed us. Lemonis how do you think steve is right now . Austin i think as a leader, very, very strong, but i would tell you with lee, its only a matter of time. Hes gonna fire me. Lemonis why . Austin steve and lee, they were meeting. They had conversations about the 7layer cake, and i was the sacrificial lamb. Im nervous. I dont know what to expect, and thats why i guess im scared. Lemonis so why wouldnt you talk to steve about solving that problem for you . Austin with lee, hes an authoritative person. Steve, he absolutely hates conflict. Lemonis but he cant lead you if he doesnt know what youre thinking because if hes your ultimate leader, right . Austin right. Lemonis then why wouldnt you allow him to lead . Lets go talk to him. John austin is like your brother. Lemonis hes a good dude. I love the fact that austin feels comfortable enough to talk to me about whats happening in the business, but i cant resolve their problems. Im not here every day. Austin i guess im just gonna squash this. Im afraid that with lee, the way he was treating it, its done. Its only a matter of time. Lee you resign. You cant have people, especially managers, who just resign and then decide, no, im gonna come back next day. Maybe the next day after that, ill decide to resign again. John this is a tough one because i totally see what austin is saying, and i see, you know, where lee is maybe coming from and certainly what steve is saying. Lets see what you do. Lemonis if youre looking to take your business to the next level, log on to. Dimitris on it. Eating right. And getting those steps in . On it dimitri thinks hes doing all he can to manage his type 2 diabetes and heart disease, but is his treatment doing enough to lower his heart risk . 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. Stop taking jardiance and call your doctor right away if you have symptoms of this bacterial infection,. Ketoacidosis, or an allergic reaction and dont take it if youre on dialysis or have. Severe kidney problems. Taking jardiance with a sulfonylurea or insulin may cause low blood sugar. Lower a1c. And lower risk of a fatal heart attack . On it with jardiance. Ask your doctor about jardiance. On it with jardiance. You met on an app. Why . Delete it. Hes the one. Gesundheit. [sneezes] i see something else. A star. With three points. Youre in a. Mercedes. Yeah, we wish. Wish granted. With four models starting under 37 thousand, there could be a mercedesbenz in your very near future at the spring event. Lease the a 220 sedan for just 349 a month with credit toward your first months payment at your local mercedesbenz dealer. [car[clicking of ignition]rt] uh wha woof eeh woof wuh [silence] [engine roars to life] [dog howls] dramatic opera music swells from radio [howling continues] what do we wburger. Inner . I want a sugar cookie. Wait. I want a bucket of chicken. I want. Its the easiest because its the cheesiest. Kraft. For the win win. Im afraid that with lee, its done. Its only a matter of time. Lee is new. Hes only been there a couple of weeks, but hes an authoritative person, and hes gonna fire me. Im the sacrificial lamb, if you will. I guess what im getting at is just asking for a little bit of help. Steve theres been a disconnect between you and i for sure, right . Austin its the layer in between us. Steve so first thing monday morning, its obvious to me we should talk about it. Lemonis first of all, i love the fact that youre having an open dialogue, and youve been a great listener, and youve been a great communicator. The guy gives you 100 . You have to hold on to them. They have to feel protected. Your job is to protect them. Steve yeah. Austin, you dont have to worry. John you can see austin just. Lemonis yeah. He loses his job. Hes got to provide for his family, you know . Amber is it always awkward for you when you have to intervene between Business Owner and employee . Lemonis it can be awkward, but i really feel like if they were good communicators, they would have done it before. I think my frustration was im very much of a frontline supporter, right . So the guys and gals on the front lines are more important to me than the guy in the front office. Amber right. Lemonis in this particular case, i felt like i needed to provide some ground cover for austin. Its, like, defending the guy that cant defend himself. Amber right, right. Lemonis the reason people will go to battle for each other is if he knows youll have his back. Austin shoulder to shoulder, arms in arm. Im. You. Yes. Lemonis okay. Lets roll. I think it would be a good idea if we can start working on what a Standard Unit would look like. Tracy perfect. Steve absolutely. Lemonis now that weve gotten the feedback from the customers on what they like and dont like, i want to take that information and incorporate it into the process of making the four Standard Units. Tracy i would add the. Lemonis i love this process. John yeah. Lemonis redesigning spaces. Is that move possible, guys . Man definitely possible. It opens up space to enlarge the bathroom if needed and the closet space. Lemonis okay. When we talked the other day about austin and lee. Steve yes. Lemonis . I wanted to get an update on where you are. Steve myself, lee and steven started talking through the situation, and austin was pretty frustrated by it and left. He said, i quit, and he walked out. I think hes having a hard time with the changes. Lemonis so hes not working here anymore . Steve correct. Lemonis i got to be honest with you. Im totally confused because a couple of weeks ago, steve and austin are talking about how theyre going to work together, and now im finding out that yesterday austin stormed out of here and quit. What happens when im not here . What happened yesterday . Austin they said that we need to figure out how to talk about the 7layer cake, and their way of addressing that and through a conversation was showing the hierarchy on the board. Lemonis okay. Austin . And i jumped the gun because they circled me and then the three people below me. Lemonis meaning that one of you guys was gonna go away. Austin right. Lemonis i partially invested in this business because of you. Amber and john, this happens to us quite a bit, a lot of times just because we dont stay there for a week or two consecutively. John yeah. Amber so well leave. Well bounce to another business and someone quits, you know . John its just a nightmare. Lemonis its tough. Amber yeah. John yeah. Lemonis i thought we were going to work together. I told you that [bleep] happens out here, not up in some fancy office. Austin someone is gonna get the axe, and it better be me and not them. Lemonis it aint gonna be you, and it aint gonna be them either. It aint gonna be anybody thats on the floor. Austin thank you, man. Thank you, and i believe you. Lemonis why dont we get everybody together in the Conference Room from yesterday, okay . Austin yes. Lemonis so i know you guys had a gettogether yesterday. Do you want to maybe lead the process . Steve sure. Okay, so what happened is yesterday we had a meeting that started off on the shop floor and led into here, where austin, you walked out. Austin guys, come on. I put three years of my heart, soul and energy into this place, and then my world is turned upside down. Lee i agree in premise that we have a structural issue to fix in this company, but theres a difference between staying in the room and hashing it out and looking at your colleagues and saying, you dont know your business. I resign. Lemonis so were you mildly relieved when he left yesterday . Lee the company is not profitable. The Business Model is not successful. Austin is it their fault . Lee the plan youre not letting me finish. Austin okay. Lee you resigned. Cant have people, especially managers, who just resign and then decide, im gonna come back next day, and im gonna work and maybe the next day after that, ill decide to resign again. Steve if you would have stopped and said, guys, i am not comfortable with this. I need the rest of the day to process, thats one thing, but you didnt contribute. You just said, hey, im out of here, and. Lemonis but i mean, steve, a guy that had been with you from the beginning that you talk very highly about, he panicked. John hold on. Pause for a second. So i agree with steve. You have to talk through it. You cant just go like, oh, well, thats it. It didnt work out. Lemonis im gonna take my ball and go home. John yeah. This is a tough one because i totally see what austins thing, and i see, you know, where lee is maybe coming from and certainly what steve is saying. Lets see what you do. Lemonis but my issue is that steves responsibility is to mitigate the damage. John yeah. Lemonis or protect the business. John yeah, okay. Lemonis play. What is your opinion about what should change in the seven layers . Steve these two would go to one layer, and these two would go to one layer. So were going seven to four. Lemonis to four. And so just out of curiosity, ill go ahead and start with you because youre squeezing yourself. Is you or lee surviving . Steve why not both . Why cant there be two people in the same layer . Lemonis are you really trying to sell me on this [bleep] he was duplicating what steve should be doing, and so it was really down to lee or steve. The question is, are you gonna be here . Is steve gonna be here . Are neither of you gonna be here . Well. You said you wanted a new chair. Earn unlimited 5 back on everything you buy at walmart online, including things for your new puppy. No no no no. We need a mop and bleach. When you want all that, you need the capital one walmart rewards card. Earn unlimited 5 back at walmart online and unlimited rewards everywhere else. Whats in your wallet . A [ siren ] doug ds everywhere else. Give me your hand i can save you. Lots of money with Liberty Mutual we customize your Car Insurance so you only pay for what you need only pay for what you need. Liberty. Liberty. Liberty. Liberty. Somewhere youll never find. Sike we put them everywhere. Grocery stores and supermarkets, gas stations, and chiropractors offices, bowling alleys, and grocery stores, which we already mentioned. Not sorry, reeses. At philof cream cheese. W what makes the perfect schmear you need only the freshest milk and cream. That one and the worlds best, and possibly only, schmelier. Philadelphia. Schmear perfection. Steve why not both . Why cant there be two people in the same layer . Lemonis how . Are you really trying to sell me on this [bleep] . In one breath, youre saying you think theres too many layers. Your suggestion is youre comanagers . Steve correct. Lemonis so what were gonna do is were just gonna pile them all into one layer. John oh, god. Amber pause for a second. John i notice that youre not laughing. Amber marcus, do you think that steve and lee felt threatened by austin, and thats why they tried to push him out of this new Business Strategy . Lemonis no, i dont think steve felt threatened by anybody. In this particular case, i think austin was playing everybody, including me. Amber right. Lemonis . And i think lee was playing everybody, including me, and steve, the owner manager of the business should have been saying, look, i dont want marcus having to deal with this. I dont want the other employees dealing with this. You guys either get your act together or youre both gonna go. John yeah. Lemonis and he didnt even pick a side. He didnt have an opinion. He was just sort of. John he avoided the conflict. Lemonis he avoided the conflict. John yeah. Lemonis which is a problem. John sure. Lemonis steve, this is a very important moment. Both of our jobs is to put the company in front of your own personal interest, and so you are permitted to come back to work here. Austin yes, sir. Lemonis and you and i will continue to work together. Steve perfect. Lemonis alright . This is the most dramafilled manufacturer ive ever been to in my life. John oh, lee did not like that. Amber nope. John ooh. Lee so what are we thinking about the next few weeks . What would you like out of me . Lemonis i think you have to decide if you feel like, you know, you could add value here. I think thats the question. John are you going after him at this point . Lee i think you need me. Austin has some capabilities, but im not sure that he could run at the layer that really should be required for a company this size. The right model is to have a gm or a site leader for this size operation. This plant, you would have to burn it to the ground and redo it. Lemonis that freaked me out when the guy said it. Im gonna burn it to the ground and start over. I was like, come on. The question is, are you gonna be here . Is steve gonna be here . Are neither of you gonna be here . Pause. Amber did you think lee was jealous of austin . Lemonis no, i think lee was too new. He just didnt get in there into a new place and befriend the guys on the floor. He should have really created an atmosphere where they were rallying behind him, not running from him. Amber yeah. John i had a soccer coach my sophomore year. I was the captain of the varsity soccer team. Thank you, i know. Doesnt happen a lot, but he pulled me aside, and he said,. Amber let me guess. Goalie . John we went to a small school. The point is this. The lesson was he said to me, people will follow someone that they dont want to let down much more than someone theyre afraid of. Ive taken that with me, and i try to do that. Ingratiate yourself, rally the troops. Lemonis work with them, be one of them. John theyre gonna work so much harder for someone that they believe in. With guys like this, all the carpenters and construction guys ive ever met, like, that matters. Lemonis its like the outsiders. John yeah. Lemonis we needed him to be ponyboy. Currently the trailer manufacturing of the frames themselves takes up over 30 of the floor space, and so what i want to do is i want to outsource the manufacturing of those trailers, and the amount. John that was a great call. Lemonis i can run through that. Three more units a month. Almost double the production of the company. With the Additional Space being freed up in the factory, theyll be able to finish the existing customized units and now start making standardized units. John oh, yeah. Things are looking up at tumbleweed. Lemonis oh, hi. John guitar riff. Lemonis im heading back to tumbleweed. I want to check in on progress, and i want to see whats happening with the Standard Unit. Steve so were moving along. Lemonis anything changed in the staff . Steve actually a couple people left. Lemonis people left . Steve yes. Lemonis oh. Okay. Steve yeah. Who left . Steve so lee did leave. Lemonis why did he leave . Steve he was really, really upset about austin being brought back, being overruled on that. That was a hard thing for him. Lemonis right. John that kind of made you happy inside, didnt it . Lemonis i was like, oh, well. Bounce. And that he did it so quickly, but theres a layer problem, and so i feel like its necessary anyway. John there it is. Lemonis oh, well. Byebye. Steve im actually really grateful that you said youre bringing him back. It was the right call. Austin this is our utility closet. Lemonis for what kind of model . Austin the standard. Steve its actually gonna all of the models. Lemonis whats in here . Austin we have a furnace. We have an air exchanger. This could be an ondemand water heater, your Electrical Panel and your 12volt action going on right here. Lemonis i want you to patent this. This is the reason that the company can be worth something because youve designed something that allows standardization to work. This cube can go in any unit. Steve correct. Lemonis it is pretty gratifying when people start to realize that the things that youre trying to put in place not only will benefit the business but will benefit them, and that was a moment for me. John yeah. Lemonis . Seeing him out on the floor and understanding how the ac unit was gonna work or how the generator was gonna work or how things were working is really all i ever wanted. John yeah. Christian we have four models total with two floor plans per is what were gonna work through and end up with a total of eight. Lemonis so i think now that you guys have got your head around that, what i want to do is i want to take one Standard Unit and this team to a National Company that could potentially buy maybe 10 to 15 or 20 a year, but i need it to be done in probably 2 1 2 weeks. Steve im gonna push back on marcus here for a minute. Lemonis lets go look at the new tumbleweed tiny homes. Woman sounds good. John so this design, really boringlooking. Stits not getting in my way. . I had enough joint pain, swelling, tenderness. Much better. My psoriasis, clearer. Cosentyx works on all of this. Four years and counting. So watch out. I got this watch me. Real people with active Psoriatic Arthritis are feeling real relief with cosentyx. Cosentyx is a different kind of targeted biologic. It treats the multiple symptoms of Psoriatic Arthritis to help you look and feel better. It even helps stop further joint damage. Dont use if youre allergic to cosentyx. Before starting, get checked for tuberculosis. An increased risk of infections and lowered ability. To fight them may occur. Tell your doctor about an infection or symptoms, if your inflammatory bowel disease symptoms develop or worsen. Or if youve had a vaccine, or plan to. Serious allergic reactions may occur. I just look and feel better. I got real relief with cosentyx. Watch me feel real relief. Ask your rheumatologist about cosentyx. burke weve seen almost everything, so we know how to cover almost anything. Even a gold medal grizzly. sports announcer what an unlikely field in this final heat. burke not exactly a skinny dipper, but we covered it. At farmers, we know a thing or two because weve seen a thing or two. So call 1800 farmers to get a quote. We are farmers. Bumpadum, bumbumbumbum finding the right words can be tough. N it comes to autism, finding understanding doesnt have to be. Together, we can create a kinder, more inclusive world for the millions of people on the autism spectrum. Go to autismspeaks. Org you met on an app. Why . Delete it. Hes the one. Gesundheit. [sneezes] i see something else. A star. With three points. Youre in a. Mercedes. Yeah, we wish. Wish granted. With four models starting under 37 thousand, there could be a mercedesbenz in your very near future at the spring event. Lease the a 220 sedan for just 349 a month with credit toward your first months payment at your local mercedesbenz dealer. So my concern is we took our best guys, and we put them on this unit for it to get done in 2 1 2 weeks, and the other ones get slowed down. One of our rules is weve got to protect the floor, and when you do this, we dont protect the floor. John i would say that i like this moment. Lemonis that hes pushing back . John yeah. Lemonis yeah, me too. I want him to. I actually appreciate that because that shows me a commitment to being a leader. Without that, i just didnt know who was gonna run the business. Hallelujah. I think your explanation of wanting to protect the stability of the floor makes me want to follow your lead, and i appreciate you having that evolution to say, i want the sale bad, but im not willing to break my people or my customers for it, and that for me is really the epiphany. So what is the time . Steve well, its 3 1 2, 4 weeks. Lemonis so can you compromise 3 1 2 . Steve yeah, we can do 3 1 2. Lemonis so the task is to get this unit made. We will take the unit to a location, and the group will pitch the entire company. Okay . Ill let you guys work. John the old steve would have just been like, yeah, oh, yes. We can do that, whether they could or they couldnt. Lemonis trying to be a people pleaser. Now that the team has Standard Units in production, we can accelerate the purchase of raw materials, improving our margins. Not only do we have them readily available, but were getting a pretty significant discount because were buying in bulk, almost 8 on the material side. I estimate that it will be close to 4,000 a unit. Across 200 units a year, thats 800,000 of additional gross profit. This is a standard floor plan . Steve its a standard floor plan. Lemonis so how many days would this have normally taken to make as a custom unit . Steve would have been about 21, 22 days. Instead its gonna be about 16, 15 days. Lemonis and what did they pay for it . Steve 80,000. Lemonis and what did it cost you to make . Steve our costs on this one are gonna be 46,000. Lemonis so your margins are 40 . Steve 40 . Were improving. Lemonis and how has austin been . Steve hes been amazing. Hes doing an amazing job. We are communicating in a way that we never communicated before. Austin hes talking to us. Hes getting involved in the. Instead of just making a decision, hes seeing how those decisions are effective. Lemonis is he spending time on the floor . Austin heck, yeah. I dont even know when hes left. John this is a nice moment. I like this. Austin were not having to reinvent the wheel, per se. We know what we need to do, and were just gonna execute on our plans. Lemonis now that the process is really right and the standardization has been implemented, i want to take steve and the team, along with one of the units, to meet with representatives from equity lifestyle properties. The primary reason is to really see if theres a real potential for big orders here and if steve truly can sell it with conviction. How are you . Jeff hi, there. How are you doing . Lemonis im marcus. Jeff im jeff wehrung. Nice to meet you. Lemonis nice to meet you, sir. Steve good to meet you. Im steve. John so this design. Amber pause. Lemonis pause. John . With the boxy design, its such a. Its a tough thing, right . The most efficient use of that space is a giant rectangle, but theyre really boringlooking. Even when you break up the outside, you know, did a nice job doing that, its. I love when you can have an interestinglooking tiny house. Lemonis like the ones we saw before that . John yeah. Those are, like, super cute, and that, you would welcome into your community, you know . Maybe not you, but i mean. Lemonis play. Austin theres more storage in this house than any of them. Pat very nice, yeah. Very clean. Lemonis its bright in here. Tracy it is, very bright. Lemonis its airy. Steve we did change the lights, didnt we . Austin yes, we went to recessed lights, led lights. The bedroom is up on a dimmer. Lemonis oh, let me go try. Pat very nice. Lemonis boy, i see the wood so differently now that youve pointed it out. John its the only thing in there. John break it up a little bit. Lemonis yeah. Tracy how you doing up there, marcus . Lemonis good. Tracy you like that dimmer . Pat okay, nice. Lemonis just so you know, dimmers are my favorite thing. They are my favorite thing. Austin you see the usb up there you can plug your phone into . Lemonis i think what i love about the Standard Unit more than anything else is that the team really listened to what the customers said. Integrated furniture, space, thats the key to manufacturing, feedback to final product. Tracy the bathroom, ladies. Woman yeah, this is huge. Pat wow, nice. Oh, this is great. Amber what did you think of the layout with all the tiny homes youve done . John super efficient. Its all about efficiency. Amber right. John thats what a tiny house really is. Tracy every inch counts with a tiny house, right . Pat absolutely. And then i know we have a similar unit, and the pitch of the roof was a little bit higher. Austin yeah, you raised it a little bit . Pat it makes a big difference when youre in the loft. Lemonis to make the roof higher . Pat yeah. Would you have that flexibility . Lemonis if he starts agreeing to, well, well change this by an inch and that by an inch, move the roof up, and well do all these things, i just wasted a bunch of time. Were not doing that. Amber john, how are they different than what you see today . John the only real difference is the quality of the finished material because youre only using a little bit because the space is much smaller, and it really elevates the space. Lemonis perceived value is a lot higher. John totally. Lemonis and i was surprised that i didnt address that more. I should have been thinking way more about the aesthetics and less about the construction. That was a big miss on my part, but thats why youre here. John that lesson was free. Ow. Lemonis we want you to feel like youre connected to the business. Austin i dont even know what to think. I feel like im dreaming or something right now. Lemonis they ended up leaving. Steve fell back into his old ways, and the business still owes me all of the money. John ooh. Tmobile has the first and only, nationwide 5g network. And with it, you can shape the future. Weve invested 30 billion dollars and built our new 5g network for businesses like yours. While some 5g signals only go a few blocks, tmobile 5g goes for miles. No other 5g signal goes farther or is more reliable in business. Tomorrow is in your hands. Partner with tmobile for business today. Wean air force veteran made of tomorrdoing whats right,. Not whats easy. So when a hailstorm hit, usaa reached out before he could even inspect the damage. Thats how you do it right. Usaa insurance is made just the way martins family needs it with hasslefree claims, he got paid before his neighbor even got started. Because doing right by our members, thats whats right. Usaa. What youre made of, were made for. Usaa somewhere youll never find. Sike we put them everywhere. Grocery stores and supermarkets, gas stations, and chiropractors offices, bowling alleys, and grocery stores, which we already mentioned. Not sorry, reeses. Atthe perfect schmearnow of cream cheese. The recipe we invented over 145 years ago and me. The worlds best, and possibly only, schmelier. Philadelphia. Schmear perfection. Youd do anything to get rid of this car, but whod buy it . With the cd changer thats stuck playing limp bizkit. Over and over. And over. Just sell it to carmax. Well buy any car. Even this one. Because thats the way it should be. Carmax. Because thats the way it should be. Lemonis to make the roof higher . Pat yeah. Would you have that flexibility . Steve so just keep in mind as long as we can make them standard, then theyre gonna be great. Pat right, right. Lemonis good answer, brother. Ive got to be honest, im really impressed that steve isnt falling back to his bad habits where he would let a buyer of a product just drive the process. Whats changed with steve, guys . Tracy i feel like hes actually reaching out to a lot of our employees, and theyre recognizing it, and theyre seeing it. Austin ive heard from the floor they use your name now. You helped involve. Steve thanks. Austin . The people and the business. I respect the crap out of it. It means because hes actually out there on the floor, and its a hard job. Steve thanks. John this is a cool moment. Lemonis steve and i, weve made the decision to have you guys become partners in the business, and we want to distribute some equity to you, and we want you to feel like youre connected to the business as more than just a team member with a paycheck. Tracy i dont know what to think about that. I think thats amazing. Austin i dont even know what to think. I feel like im dreaming or something right now. Tracy hard work pays off. Lemonis thats right. Amber what made you decide to do that, give them equity . Lemonis why . Amber yeah. Lemonis its my schmuck insurance. Those two, the husband and wife, were really integral to the way the business functioned, one of the sales side and one on the manufacturing side, and i wasnt comfortable that if i left there without them tied to it, that it would work. John yeah. Lemonis play. When i think about my investment into tumbleweed, i probably couldnt be more excited because with the new standard models and the new manufacturing process and an Unbelievable Team on the floor and a new revived leader, as far as im concerned, tumbleweed has a very bright future. John so when you go in, you saw austin. You sort of invested in him. Lemonis i invested in the staff, right . And my knowledge of the industry. They ended up leaving. I think steve fell back into his old ways, and were now in a situation where steve is still there. He stopped communicating with me. The business still owes me money, so im a lender today, and its probably the biggest challenge of doing business on television. John yeah. Lemonis it is more real than i would have ever imagined that it could become. And so over the course of these deals, a good chunk of them have gone bad. The difference between people that it works out for and people that is doesnt isnt the math. It isnt the business. It isnt any of that. Its character. John wow. Amber yeah, the people. Lemonis thats it. You want to be partners in this business . John i dont know. I have to see the financials. Lemonis lets assume that we own it all, and theres no debt. John okay, lets do it. Alright. Good. John done. I think thats binding. You guys were rolling, right . Lemonis totally binding. John okay, good. Lemonis if this is not now is the time to know it. You, tonight on the profit. Lulu my name is lulu eschelman. My company is called lumillamingus. Lemonis when a mom entrepreneur tries to start a business to set a good example for her kids, her plan goes haywire when her manufacturer backs her into a corner. Florence im not changing any of my price. Lulu ah lemonis if i can push her to unlock her creativity. Is Everything Black . Lulu i dont love color. Lemonis . Stabilize her supply chain. Suuchi this is designed to be a highefficiency production house. Lemonis . And increase the perceived value of her product. Woman i dont think it looks expensive. Lemonis . She wont be able to cover her hide. I dont know what im buying into