Transcripts For CNBC The Profit 20240713

Itll be launching later this year. Lemonis can we hold, please . Pause, hold. If you were inspired, does that mean. Kathy i was inspired. Lemonis does that mean that i. Kathy well talk. Lemonis oh, thanks, kathy. That makes me. Kathy but you inspired. Lemonis now i feel. Oh, yeah, thats. Im here to make money, not inspire people only, but. In the last seven years of doing the profit, ive visited nearly 100 businesses. Lets go make some money [ horn honking ] and ive traveled the country trying to fix the people. And you do 1 million a year . You should be proud of that. Man but we dont know how to keep any of it. Lemonis . Fix the process. 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 were gonna give you an inside look at an episode from season four. Its murchisonhume. Over the next hour, im gonna take you behind the scenes to share with you what i was actually thinking during filming. I did like the fact that she started her business out of a need to solve a problem. Kathy mmm. Lemonis . Share some secrets. Pluses and minuses for the change . Max i mean, i see all minus. Lemonis all minus . Max yeah, because the name, obviously, its insipid. Kathy seemed like there wasnt an openness to even discuss it. Lets do a focus group. Lets see how people respond to it. Lemonis . And give you an honest assessment of my decisions. How much money do you think the Business Needs . Max about 1 million. What . Why are you laughing . Lemonis my name is marcus lemonis, and this is an inside look at the profit. Kathy, what is the actual business name . Kathy our company name is Kathy Ireland worldwide. Lemonis worldwide. Kathy . And our brand includes everything from fashion, apparel, home furnishings, lighting, and i have a book that just came out this last month. Lemonis high five, yeah. Kathy thank you. Its a novel. Its fictional, so. Amber whats the name of it . Kathy its fashion jungle. I mean, its such. Its been such a journey. Lemonis billiondollar company . Kathy were really grateful. Weve been. Amber i love you, kathy. Lemonis its a big business. Kathy were were grateful. Lemonis okay. Amber lets do it, bang. Lemonis cleaning products are a 50 billion industry, and apparently kathy knew that. So she just basically said, im gonna do it myself. Hello . Lillian hi, im lillian. Lemonis nice to meet you. Lillian yeah. Peter. Peter hi, marcus. Im peter. Lemonis nice to meet you. Peter nice to meet you. Lemonis im marcus. Lemonis how are you . Hannah hi, hannah. Lemonis nice to meet you. Taylor im taylor. Lemonis nice to meet you. Max whos for tea . Im making some. Oh, youre here lemonis hi. Taylor this is max. Amber oh, youre here. Lemonis shes like, oh, youre here. I was meeting the company mascots. Max oh, yes, our fur babies. Lemonis they normally have this kind of disposition . Max yes, theyre very calm. Lemonis do they take on their owners disposition . Max probably not. Lemonis okay, and so why did you start this business . Max i had a young 18monthold who was born with eczema, asthma and allergies and allergic sensitivity. So when i was cleaning the house, it would exacerbate them, and i thought, im just gonna make my own. I would get, like, plantbased cleaners. It was absolutely nontoxic. Lemonis and thats the cleaning agent . Max yes. Lemonis wow. I did like the fact that she started her business out of a need to solve a problem, and i think oftentimes Business Owners dont do that. Kathy i love that about max, too. It was a need for her child and that she recognized, you know, surely theres got to be other families who are struggling with this and really seeking to find something that would work. Lemonis solve it. Amber max had good intentions. Lemonis yep. Kathy mmhmm. Lemonis whered the name come from . Max its peters fathers two middle names, Roderick Murchison hume kater. Hes on the wall over there. Lemonis have you had any headwind in the states with the name . Max oh, ive had resistance, yes. Lemonis merchantsin, i just. Max yeah, its murchison. Lemonis murchison . Max yeah. Lemonis not merch. Max theres no chin. Peter theres no n. Lemonis murchisonhume. Max i just thought it sounded like it had gravitas. Lemonis when you name your brand, you want it to be something memorable, and it has real clarity to it, not something with gravitas like a law firm. Are these the products right here . Max yes. Lemonis what are the price points . Max so the triggers are all 9 at retail. Lemonis 9 . Max i know. Lemonis who can afford that . Max yeah. Amber kathy, you know, with your, lets say furniture, a lot of the products that you deal with, youre almost the complete opposite of someone like max because youre selling more of this relatable product and price point. Its in walmart. Its all through wayfair. Kathy we do have our luxury brands, but we started with our opening price points, and people said you couldnt do that. You cant start at mass and move up, but nobody had a good reason why, but you have to build that trusted relationship with a customer. Once you build the trust you have to earn, then theyll grow with you, and theyll say, okay, i grew up as a little girl sleeping in this princess bouquet bed. Im getting married now. Im gonna spend a little bit more money on this gown, on these diamonds, whatever it is, but youve got to build that trust. And when youre starting, its so important that you really know who you are serving. Our customer, thats my boss, and if i dont listen to my boss. Lemonis theyll fire you. Kathy were all in trouble. Amber bang. Lemonis where do you manufacture it . Max we manufacture it in skokie, and we ship it to dallas. Lemonis thirdparty Logistics Business . Max correct, 3pl, yeah, yeah. Lemonis that seems inefficient. So for a typical bottle like this, what does it cost . Kathleen 37 cents for the bottle. Lemonis okay. Kathleen closure is 14 cents. Lemonis okay, and then how much is the label . Kathleen the label is 18 cents. Lemonis okay, so now were at 69. Kathleen the filling is 35 cents. The box is 6 cents. The partitions are 7 cents. Lemonis okay. Kathleen and. Lemonis ingredients. Kathleen . Is 12 cents. Lemonis so at 1. 29, its still sitting in chicago. Wheres the next place it goes . Max dallas. Lemonis okay. What does it cost to get it to dallas . Kathleen 50 cents. Max 50 cents a bottle. Lemonis murchison products are made in chicago, then transported to dallas, and then shipped out from there. To get them to dallas adds another 50 cents of cost to each individual unit, but keep in mind murchisonhume, like any wholesaler, sells to retailers at twice its cost, meaning that the 50 cents turns into 1 by the time it gets to the retailer. Then the retailer adds its markup, and that 1 becomes 2, and now an extra 2 have been tacked on to the retail price just because of dallas. And what do customers do when they see that inflated price . Well, you take a guess. They walk away. Amber why would max do Something Like this . It seems basic to have it in the same state. Lemonis it seems basic when we explain it that way, but they forget that the Multiplier Effect from them to distributor, distributor to retailer, retailer to consumer. It just gets lost, and so you start peeling that thing back. You can end up actually being more profitable as a company because as your price goes down, your velocity of sales should go up. Kathy when youre in it, it can be difficult to see it. Lemonis yeah, right. Walk me through this. Max so we used to have a textheavy label. I wanted to make it easy for the customer to identify, so we made some icons. Lemonis alright. Im gonna challenge you on that. Max oh, no. Lemonis i feel like its, like, buying products for my castle or something. Taylor the chair is kind of like a chair that would be in a castle. Max easy to identify, stylish, chic. Lemonis anybody have a chair like that in your house . Kathleen no. Max i do. Lemonis of course you do, lady. Do you think theyre too fancy . Taylor the bun is pretty tight. Max its a chignon. Lemonis what is that . Max its french. Lemonis its probably french for tightass product. Look, forget about the fact that these icons alienate regular people. The bigger problem with them is they dont actually describe what the product is. Like this lady with the bun, you would think thats haircare product. Right . Nope, its bathroom cleaner. Taylor we dont look like a cleaning product. Thats royalist. It looks, like, you know, the queen of england would have it, and i dont think it should. We make toilet cleaner. Lemonis what is the best in show trademark . Taylor we own that. Thats registered. Lemonis oh, really . Taylor yeah, we bought that. Lemonis look, i have a pretty big investment in the pet industry. Huge. Its a chain of pet stores called bentleys. Now, i dont know much about maxs petcleaning products. But the brand best in show . Well, that trademark is worth something. Id like to actually go over the financials with everybody. Kathleen okay, okay. Lemonis when i look at 2015, 900,000 of revenue, 489,000 of cost of goods, and all the expenses is 888,000. Kathleen mmhmm. Lemonis so last year, the company lost 477,000. Kathleen under the c. E. O. s watching. Lemonis is the c. E. O. Here today . Lilliana the c. E. O. Left. She got pinched by playboy. Max shes doing their digital marketing. Lemonis why was there a c. E. O. . Max i dont feel qualified to be a c. E. O. Lemonis cost, sale, gross profit. Max its not hard. Lemonis yeah. Max to minimize our 3pl cost, were gonna try to bring inhouse our directtoconsumer shipping. So were gonna fulfill downstairs. Lemonis so youre gonna get in the distribution business in an office plaza . Max kind of, yes. Kathleen were really not hoping to do so. Lemonis its not a distribution center. Its a Little Office in a strip mall. Secondly, i dont think its ever a good idea to distribute products from one coast to the other when you know that your buyers are all over the country. You own approximately 80 of the business, and the assets that are left inside the company are 289,000 of inventory sitting in the warehouse. So on the Balance Sheets, 80,000 in payables. Theres 53,000 in cash. Your past two payables exceed your cash. Kathy her brand could be tea. She could do a great tea brand. Amber next year, kathys gonna launch hume tea. Lemonis oh, if that [bleep] happens. Youre sort of out of gas. Kathleen definitely. Max marcus, some tea . Even when i mention the numbers and the fact that they were really bad, i felt like i was at afternoon tea. Can i spend a minute with max, just her and i . Max sure, definitely. Lemonis at what point are you gonna worry that your doors are about to close . I think she is actually in denial. Max, it feels like you guys are slightly delusional about whats happening. Its like it doesnt feel like a company in crisis to me. It feels more like appearances than reality. Max we should have been out of, by all rights, we should have been out of business three months ago. Lemonis so then why are you continuing . Max i just cant give up because i dont want to let everyone down, and i will have moved my family away from our Beautiful House to come out here and live in a little house, thats too small for us, on a highway. I owe it to my family to not give up and stay and figure it out. Lemonis okay. Let me pore over these numbers, and you and i will connect a little bit more. Max ill repair my lipstick. Lemonis how did you feel during that moment . Kathy it made me really sad because i want her to step up and be strong. Lemonis you think it was a tactic, or do you think it was real emotion . Kathy i dont want to make that judgment on her. Lemonis it felt sincere to me. Amber i actually think in that moment, she was really embarrassed. I think you were telling her what was wrong with her business and her finances, and someone who everything had to be perfect, getting real is hard for her. I think she wants to look and be perfect. I mean, thats her, in my opinion. Lemonis good seeing you. Good to see you. Peter good evening. Lemonis so hows the process been for you guys so far . Max very good. Lemonis how much money do you think the Business Needs . Max i think it needs about 1 million. Lemonis i was like, howd you come up with that number . I dont think you need 1 million because im not the person to give you 1 million. Max okay. Lemonis im not even the person to give you a half a million dollars. Its too big of a crap shoot for me, and so im not willing to invest more than 250,000 in the business, and i feel like im gonna have to do more leg work than i typically would, and so my offer has to be for at least 50 , at least. Max thats gonna be a problem. Im sorry. Okay, get it together, max. Kathy shes walking away, and i didnt like that. When things get tough, you dont walk away. Amber yeah, stay at the table. Kathy yeah. Amber i think as a woman. I dont know how you feel, kathy, but when i see that, i get so angry. Kathy i do, too, because we work so hard. Like, dont do that. Lemonis whats so weird is, as the nonfemale, i felt really bad for her. Amber i just. I would like to see a woman be stronger than that. Lemonis i think for me, what i was more bothered by, i wanted to have that open debate of, like, how you arrived at that and what youre gonna do with it. Kathy emotions or not, she could have continued the conversation and moved forward. Lemonis the fact that taylor came here with your direction and had her manipulate products was wrong. It was back to that, what sort of impression and image am i creating . Lemonis what was the first product people know aflac. Aflac . But not what they do. So were answering their questions. Aflac is auto insurance, right . No. Uh uh. Is it Homeowners Insurance . No. Uhuhuhuh is it duck insurance . Nope. Ahhh do they pay me money directly when i get sick or injured . Yeah. Aflac you got it. You know aflac boom get help with Expenses Health insurance doesnt cover. Get to know us at. Aflac dot com. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. You ever launched in the market . Kathy socks, a single pair of socks made from recycled sodapop bottles, and i was an aging pregnant model at my kitchen table. I mean, doors slammed in our faces. We made some big mistakes along the way, and there were times when we slept in airports to save money. Its not a sacrifice. Its a bold investment. Lemonis part of the process. Kathy its part of it, and it, you know, made it possible for us to sell our 100 millionth pair of socks, but what. Lemonis how many pairs . Amber oh, my gosh. Kathy 100. Well, that. We had a celebration when we sold our 100 millionth pair. It was like, yay lemonis and how long ago was that . Kathy that was many years ago. Lemonis and how many do you think youre up to now . Kathy i dont know. Lemonis oh amber a hundred million. Lemonis and i love the fact that youre modest about it. A hundred million. Max im sorry. I needed to compose myself. Lemonis yes, you do. Max the lowest we would go would be 500,000 for 30 . Lemonis im willing to go 250,000 for 30 , and i want to own 75 of the best in show trademark. Max can i have 30 of best in show, since i came up with it, and i will work my butt off for you, and i have ideas. Lemonis yes. Oddly enough, i probably would have paid 250,000 for the best in show trademark. Even if i never wanted to manufacture anything, i could license the crap out of it. Kathy right. Max im down with that. Should we shake . Lemonis we have a deal . Max we do. Lemonis okay, thank you. Peter well done. Lemonis thank you. Max thank you, marcus. Wow. Lemonis the deal that we made is for me to invest 250,000 into the business. To drive down the actual cost of goods, these products cannot cost 1. 79 for a bottle, and its my opinion that the brand feels disconnected from the average american. Max, i think you struggle with your ability to be a good c. E. O. , and my goal is to give max the tools and the resources and the contacts and let her run her company. Max thats all i need. Lemonis yeah, great. Good, good. Amber you used to tell me, like, offcamera that it bothered you when max would say that she didnt think she was qualified to be a c. E. O. Why is that . Lemonis well, because i dont think a c. E. O. Is a title. I think its a philosophy, and if you have deficiencies in certain skills, then you can surround yourself with people. But why would you not want to be the leader, set the tone, set the tempo, set the culture for your organization . Because, if not, then just just be an employee. Kathy it feels like a lack of confidence. Amber are you the c. E. O. Of your business, kathy . Kathy yes. Lemonis even though she doesnt know how many pairs of socks shes sold, at least publicly. Amber even though shes up to, like, a billion pairs of socks. Lemonis four billion socks. Im gonna google that number. Im gonna find out by the end of today how many billions of socks youve sold. Max told me that she sold her products at the Container Store. So i wanted to head over and see what it looked like. What im ultimately looking for is to see the companys positioning on the shelf. Theyre giving you a pretty significant. Max they always give us great real estate. Lemonis it normally looks this good . Max always on endcap. Lemonis wow. Max theyre very good. Lemonis does it typically look this plentiful . Alana its usually just one row that weve got down toward the bottom. Lemonis which shelf would it typically be on . Alana it actually would go right along this line here. Lemonis this one here . Alana yes. Lemonis and so when did we get a better space . Alana we just moved it yesterday. We were asked to move it up to the top. Lemonis okay, by the regional manager or. Alana no, that was something that i think someone from murchisonhume who had asked us to do that. Max taylor came and did a tidy up. Lemonis a tidy up. To find out that employees came in and moved it around and restocked it, it was back to that, what sort of impression and image am i creating . And i dont know if i would have been angry if i would have gotten there and it would have been on the bottom. I would have been like, okay, great job getting in the Container Store. Its an amazing company, congratulations. Now what do we need to do to move up, instead of trying to trick everybody . Amber right. Lemonis thats a little weird that this got staged. Its a little weird. Max well, you know, its like putting lipstick on when you know youre going to be on television. Lemonis you know that you got busted, right . The fact that taylor came here with your direction and had her manipulate products, i do not agree with it at all, and its wrong. Max you know i hate clean evolution. Taylor i think it could be interesting, yeah. Max theres no way in hell. [ groans ] kathy walking away again. Lemonis if youre looking to take your business to the next level, log on to. Thats why working together ist more important than ever. Alana so here is what it would normally look at t is committed to keeping you connected. So you can keep your patients cared for. Your customers served. Your students inspired. And your employees closer than ever. Our network is resilient. Our people are strong. Our job is to keep your business connected. Its what weve always done. Its what well always do. [ celebrate together now by lonis featuring illis prat ] wthe Natural Light is amazing. Hardwood floors. There is a bit of a clogging problem. clog dancing at least geico makes it easy to bundle our renters and Car Insurance. Yeah, helping us save us even more. For bundling made easy, go to geico. Com lemonis okay, theyve dedicated to merch one shelf, and so what we need to make sure is that we narrow the products down to whatever is gonna give them the fastest turn and the greatest margin. What i learned is that maxs product isnt doing that well. Its not up to the standards that Container Store would like it to be to be in an a position, and thats a function of price, the branding, the messaging, all the things we need to fix. I also want to drill deep into the numbers so that we know what products sell and what products dont. Doesnt it baffle you that people dont do that on a regular basis . Kathy yeah, yeah, yeah, absolutely. Lemonis have you had products not sell or businesses not make it . Kathy oh, yes, weve had i mean, its getting in solution mode and asking the tough questions and being willing to really. Lemonis even if you dont like the answer. Kathy even if you dont like it. But you know what . Its a lot better getting a tough answer than it is not making your numbers, not making payroll. Lemonis yeah. Amber yeah. Lemonis so, kathleen, what i need you to do is to build one sheet of paper that takes all of the skus, puts the margin, and then well take our top skus, and well push those products. Max alright. Lemonis shes like, whatever. Lemonis i want to work on the label so that it maybe is a little more relatable. Lets sit with taylor and work on some ideas. Max alright. Lemonis alright . When you think about the soap, what would you change visually . Taylor visually . When we went to the icon, i felt we were more approachable. Max the other idea was that people that might have help in the house, it doesnt necessarily speak english, its easily identifiable what it is and what its purpose is. Lemonis when she said, oh, yeah, you know, like, for people that have help, i was like, um. And the fact that she says it without even, like. Kathy no, yeah. Amber skipping a beat, like. Lemonis yeah, like the fact that my maid cant speak english, which is so relatable for people across america. Amber absolutely. Lemonis so relatable. You change that to clean evolution . Taylor yeah. Max you know i hate clean evolution. What do you think of the name clean evolution . Taylor i think it could be interesting. Lemonis how about that forwardlooking tub . Taylor yeah, yeah. Lemonis it was a pedestal tub, but it wasnt so stuffy. So we can print this and mock it. This is just a mockup, just an idea. So pluses and minuses for the change . Max i mean, i see all minus. Lemonis all minus . Max yeah, because the name, obviously, and the bathtub straight on looks like a muppet. Its insipid. Taylor thats a little confusing. A bathroomrelated icon makes a lot more sense to me. Max i just cant get past the icon. So to me, this would be, like, a mies van der rohe chair in a castle in scotland. Lemonis a what . Max it doesnt. It looks weird. Lemonis a mies van der rohe chair in a castle in scotland . I dont know what that is. Amber in scotland. Kathy, what did you think of clean evolution . Kathy i liked it. I liked the tub. I just liked the clarity of it. Its like, okay, now i get. Now i know what i would use this for. It seemed like there wasnt an openness to even discuss it. Lets do a focus group. Lets see how people respond to it, and lets ask, you know, customers out there what they like. Amber so we do have a deleted scene where people did sort of look at maxs products, and they didnt like the name, and they didnt love the products. Lemonis i just wanted her to hear other people say the name or not be able to say the name, and it didnt go well. Watch. Max hi, darling. Would you like a sample . Lemonis what do you think of the packaging . Woman highend. Lemonis highend, okay. Max would you like to try some hand cream . Woman how much is this for . Max hand cream is 26. Woman [ laughs ] lemonis what would you pay for this if you saw this at a Grocery Store . Man floor cleaner . Lemonis yes. Man 5 bucks. Lemonis when you look at this packaging, what type of products do you think it is . Man 2 like, Hair Products . Lemonis hi, folks. Would you pronounce the name for me . Woman 2 um. Merkisonhumey . Max murchisonhume, close. Woman 2 i could never spell it. I could never say it. I could never search for it. Kathy my old Job Description when i worked as a model was, shut up and pose. I had an opportunity to speak publicly, and a critic said i had a voice that could kill small animals. Really mean. Lemonis somebody said that . Kathy somebody said that. I was 25 years old. I had a really high voice, but my response is, thank you. Criticism can be a gift, and sometimes its wrapped in a nasty package, but you got to open it to discern, is it just trash, or is there something i can glean from it . Is there a gift in there . And i think sometimes entrepreneurs can miss that. Lemonis i agree. You need to be able to deliver something clear and understandable for everybody. So id like to keep moving forward on this. Max but what about a different iteration of the name, like m. Hume or m. Home or. Lemonis no thanks. As the c. E. O. Of the business, this is one of those challenges, tough decisions, got to pick a name, got to pick the icons. Taylor yeah. Max theres no way in hell. [ groans ] kathy walking away again. Max byebye, pretty, little, fancy labels. Were gonna be separated from each other. That cant happen. Its wrong. [ cellphone rings ] lemonis i remember this. Amber oh, this brings back bad memories. Max hello . Lemonis max . Max marcus, that was bananas. Frankly, im not gonna be hokeydokey kaboom i am not down with that. Lemonis but i dont think you think im hokeydokey kaboom either. Kathy what does that mean . Lemonis i dont think your vision is wrong. I think your vision just needs refining. With that being said, i wanted to find out how we ultimately solve the problem that you told me you wanted my help with. Im more reasonable than you think right now. Max that is fabulous, marcus. If only it were true because. Lemonis what do you mean, only if it was true . Are you telling me that im lying to you . Max you asked me. I let you talk. So i think you. Lemonis no, but you just accused me of lying to you. Max oh, my god, marcus, you say that youre such a downhome, downtoearth, everyday joe, but thats a lot of bull [bleep] this is not how i do business. Lemonis then it sounds like youre making a decision to not want to move forward. Kathy im sorry. Lemonis coming up. You need to cut the [bleep] max um. You shook my hand. You cant honor that deal. Kathy what is the reason for staying . I mean. Lemonis the reason that i dont run. Did you know Liberty Mutual customizes your Car Insurance tada max im getting a very bad feeling, red flags, so you only pay for what you need . I should get a quote. Do it. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Wethe conference room. Ore. The speaker phone. The missing files. Not in the room . Then youre not in the know. Well, this has been nice, but can we not . Microsoft teams invites everyone you work with to Work Together. Be seen, be heard, be there when youre not. Share your files, and your opinion. And maybe even a happy little fruit guy. When youre ready to unleash the power of your team, open teams. 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. I need all the breaks, that i can get. At liberty butchumal cut. Liberty biberty cut. Well dub it. Liberty mutual customizes your Car Insurance so you only pay for what you need. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Alarm bells going off. Its a very highpressure, uncomfortable situation. Lemonis every company that ive ever been involved with will all tell you the same thing. My intensity level in the beginning is a lot higher because i need to get down to find out what the real issues are. If i didnt think you were built for this, and i didnt think you could run the distance. Max i dont know that i am. Lemonis i can see how anybody that goes through this process has that fear and anxiety. You have to really trust that i came here to genuinely work and help your business. Max that does make sense to me, and i can believe that. Kathy what is the reason for staying . I mean, she just accused you of lying. Lemonis mmhmm. Kathy people typically reveal who they are. Listen to them. Lemonis the reason that i dont run is because i understand what it takes for somebody to reach out for help. I also dont want young people who watch the show to think that when things dont go perfectly, you just pick up and go home. Its too easy in our society to get frustrated, to get annoyed, to get angry and walk away. So lets watch. Im meeting with max today so i can follow up with her on what progress shes had with the labels, but i also wanted to introduce her to a friend of mine, someone that could serve as real inspiration. Most people know her as a supermodel, but i know her as a phenomenal businessperson. And a super mom. Kathy thank you. Hi, max, kathy. Max i know who you are. Kathy how are you . Max its very nice to meet you. Lemonis so i was like, were taking max to roscoes, and she was like, why in the world are we here . I remember she walked in. She was like, whyd you bring me here . I was like, well, i love fried chicken. Max would not be comfortable at roscoes. Amber right. Did you feel that you needed max to meet with another female entrepreneur . Lemonis she wasnt listening to me, and i was like, i need max to hear from an entrepreneur who had built a multibillion dollar im gonna use a b multibillion dollar worldwide brand coming out of an environment where people were judging you and criticizing you and making it difficult for you, and you had to push through all of that. Kathy yeah, absolutely. Max im a bit of a fangirl. So im a bit. Kathy youve got a great product. Now weve got to get people connected to it. Max yeah. Lemonis but lets see some new packaging. Max okay, so this is our current bathroom cleaner. This is what it looks like. We came up with a new name called may home. Its easy to say. The second one, we went with m h. No . Okay. Lemonis last week, we talked about moving away from the name murchisonhume, but the first thing she brings out is a murchisonhume product. Max and i brought you a wild card, clean evolution. Lemonis kathy was like, what am i doing here . Why am i here . Wheres the clean evolution with the bathtub . Max well, we didnt put it with the bathtub. Kathy i like the idea of the bathtub. Lemonis im hoping over time that all of this advice will start to sink in. Please let it sink in. You struggled with acknowledging that youre capable of being a c. E. O. Max okay, yes. Lemonis right . Max yes. I guess to me, a c. E. O. Is a person that has been to business school, yeah. Kathy my formal education ended when i finished high school by the skin of my teeth. Youre qualified. My hope for you is, throw away the facade. Lemonis kathy, thank you for coming. Kathy thank you so much. Lemonis it was so awesome. Im excited about the best in show trademark, and so i thought we could Work Together doing some research. This is it. Max this looks cute, and it says natural, but i can tell its not natural right now. Woman mmhmm. Lemonis the principles behind this particular store are no byproducts, no corn, wheat, no soy. Everything is natural. Nothing is from china. Max okay, the pearlized texture tells me theres something more going on than aloe vera and lavender oil. Woman okay. Max thats just me. Lemonis youre inside of my business, and youre criticizing vendors that are on my shelf. If anybody would be creating some fake illusion, it wouldnt be those folks. It would be max. Thats what she does best. We could create a whole line of products that would be greatsmelling and natural. Max i would like to have a quiet word. Do you mind if we have a quick chat . Lemonis suddenly, max said she had something she wanted to talk about, which i thought was a little bizarre. Let me just grab a seat over here. Max my concern is that your focus is solely on best in show, and that youre not that interested in murchisonhume because of the low valuation that you gave it. Lemonis excuse me, did i miss something . Did she just tell me that im too focused on the best in show brand while ive been revamping and busting my butt trying to fix the murchisonhume brand . Am i missing something . So when you agreed to the deal, you agreed to it and then changed your mind after . Max if you want 30 of this company, we feel like we deserve more because were worth more. Lemonis so whats the counter . Max you get 15 for your initial investment, and then another 15 when you execute and actually drive that price down. Lemonis so it would be like a report card, and therefore i would be granted, like an employee, my extra options . Excuse me, but im not on audition. This is not a tryout. Maybe youll think about giving me an extra 15 . Im not your employee. This isnt a bonus program. Max you dont feel like you need to prove yourself . Lemonis no, i dont feel like i need to prove myself. I shook your hand. Max do you know what it is . I guess because we dont know you. Lemonis i hate being a generous, nice person and then feeling like people dont think that that was a fair offer. Max i dont see why its a big deal. Lemonis you need to cut the [bleep] max um. Lemonis you shook my hand. You cant honor that deal. Max that was a lot. Lemonis that was a lot . Max yeah. Will you excuse me . Lemonis sure. Kathy what i find difficult is if somebody is not hearing, and theyre not receiving help, its hard to know how to get through and how to. Until theyre willing to really have a real conversation, which involves listening as well as talking. I just. Lemonis she didnt want that. Kathy i want to feel. I want that, yeah. Lemonis youre telling me you dont have 280,000 of inventory . Max no. Lemonis but i made a deal based on this information. Max sorry . Lemonis i was like, i live a mile from here. I got to go. That Liberty Mutual customizes your insurance, i just love hitting the open road and telling people so you only pay for what you need [squawks] only pay for what you need. Liberty. Liberty. Liberty. Liberty. How do you gaveeno® happy 24 7 . With prebiotic oat. It hydrates and softens skin. So it looks like this. And you feel like this. Aveeno® daily moisturizer get skin healthy™ i am offended that you feel like i need to earn equity. Max im sorry that youre offended. Lemonis so where i am now is that the counter proposal is not acceptable. Id like to help you get your warehouse moved. Id like to help you get the packaging redone because i think it would help you, so. Max but you know what im gonna say right now, right . Lemonis youre gonna say you have to go talk to peter. Max thats right. I do. Lemonis max needs to go back and talk to peter, and quite frankly, i dont care what they talk about. We had a very clear understanding of what the deal is, and next time i go to l. A. , were gonna make sure we get it settled. Ill see you. Max goodbye. Oh, my god, what a dick amber [ laughs ] we didnt have to bleep that . Lemonis no, thats not a word you have to bleep. Dick van dyke . Thats what she was saying. Im just like dick van dyke. Amber right, such a current reference. Max should we look at our factory . Were shipping all directtoconsumer. Lemonis out of right here . Max downstairs. Lemonis thats a bad idea. I walked in there thinking that max and peter and i were gonna sit down and iron things out, but what i walked into was a mini distribution center, something that i originally said no to. Oh, that she set up while we were gone. Part of the reason that you did this space here as a contingency plan because you didnt know what was ultimately going to happen with our deal. Max yes. I mean, this is not a big deal. Honestly. Lemonis its not a big deal to you. This is, like, the moment of truth. If we want to move forward, were gonna shake on it again, and its got to mean something. What would you like to do, peter . Peter the value that you can bring to the business, wed be willing to accept the original deal. Lemonis what would you like to do . Max i would like to honor the original deal. Lets do it. Lemonis nice warehouse. Max it could be. Lemonis after our little hiccup, were back to work. We were finally able to move all of the product to visual pack in chicago. The product is made in chicago and then shipped from chicago. Thatll now save us 50 cents on every product we make. So how much is actually here . Max its about 33 pallets, so not the 120 that we thought. Lemonis so youre telling me you dont have 280,000 of inventory . Max no. Lemonis how much is actually in inventory . Max like, 70,000. Lemonis but i made a deal based on this information. Max sorry . Amber were you shocked by this, kathy . Kathy yeah, really, i mean. Lemonis and she was very nonchalant about it. Kathy right. Lemonis it was as if it was, like, not a big deal. Amber thats what you based your deal on. Lemonis well, if i buy 50 of a business for 100 grand, i still own 50 of the 100 grand. And so if im putting 150,000 or 200,000 in, and it has 280,000 of inventory, i already have 140,000 of the 280,000, not 35,000 of the 70,000. Amber right. Lemonis so i dont know what i have. Amber right. Lemonis i dont know what the deal is. Max i want to eyeball it over there. Lemonis lets do that. Max lets do that first before we freak out. So its 33 pallets. Lemonis so 130 times 33 is 4,290 boxes, and theres six items per box. Max yep. Lemonis its 26,730 bottles. Max with an average cost. Lemonis and whats the average cost of goods . Max . Is about cost is about 1. 79. Lemonis so 26,730 times 1. 79 is 47,846. Thats even worse than 70,000. I was like, i live a mile from here. I got to go. Its almost like she was looking for a breakup. What the hell is our inventory . A week later, the answer is kind of the same. Max yeah, i agree. Lemonis unbelievable. Lemo at tmobile, we know that connection is more important than ever. Weve increased network capacity, given more access to unlimited data. And provided free data for schools and students. Visit tmobile. Com to learn more. You can also manage your account, make payments, and find tmobile stores that are open near you. Weve been asking, are you with us . But we want you to know, were with you. People know aflac. Aflac . But not what they do. So were answering their questions. Aflac is auto insurance, right . No. Uh uh. Is it Homeowners Insurance . No. Uhuhuhuh is it duck insurance . Nope. Ahhh do they pay me money directly when i get sick or injured . Yeah. Aflac you got it. You know aflac boom get help with Expenses Health insurance doesnt cover. Get to know us at. Aflac dot com. Brushing only reaches 25 of your mouth. Listerine® cleans virtually 100 . Helping to prevent gum disease and bad breath. Never settle for 25 . Always go for 100. Bring out the bold™ and its just not okay with me. Max we are trying to figure it out. Lemonis look, this is obviously gonna be a problem, and something is gonna have to give. Max oh, this is from kathleen. Lemonis rather than making any rash decisions, i wanted to give max a chance to actually get her act together and figure out where the inventory really was. I gave her a good solid week. So i headed back to l. A. To figure out if were doing a deal or were not. Can we chat . Kathy thats a lot of grace. Max okay, so what are we doing today . Lemonis so where are we on the actual inventory balance . Max we havent resolved it yet. We think that it was sold. Lemonis when . Max between the time that we first started talking and the time that we were in the warehouse. Lemonis hundreds of thousands of dollars more . Max were not sure. Lemonis when i looked at the Balance Sheet and the numbers you provided, it was 280,000. I know that what we saw at the warehouse in chicago wasnt even 50,000 worth of stuff. Max right. Lemonis so thats a 230,000 difference. Wheres your cash . If you sold 230,000 of inventory at cost, then there would be 250,000 in the bank, and theres probably, like, 250 in the bank. Max you know im not the right person to discuss this with. Lemonis well, youre the owner of the business. I dont know who the right woman is. Max i understand. Lemonis what the hell is our inventory . The reason that i let stuff sit for a week and didnt ask you about the inventory is because i wanted to give you a chance to, like, figure it out. I feel like a week later, the answer is kind of the same. Max yeah, i agree. Lemonis you agree that its the same . Max i agree its the same. Lemonis unbelievable. Max still doesnt have any idea what the inventory is, and i think what bothers me more is it doesnt even look like shes made the effort to figure out what it is. So i asked you in the warehouse, now that the inventory is different than both of us thought, what do we do . Max i would wait and find out what the actual. Lemonis but i did wait. Its a week later. You could have hired somebody. It just didnt become important enough. Max i understand. Lemonis well, do you, though . Max yes, of course. Lemonis the inventory is not there, and she doesnt seem to be remorseful about it or apologetic about it. Pause. I started to think at this point in time, youve said no to everything. Youve tried to rework the deal. Its almost like she was looking for a breakup and couldnt figure out a way to do it. I felt like she just didnt want me to be there. Its so lost on me that the c. E. O. Of a business isnt, like, fivealarm fire. Max i understand. Lemonis did the people that work here steal from her . Max i dont have a satisfactory answer for you. Lemonis yeah, obviously. I was able to deal with us learning how to adjust to each other, but i cant deal with the fact that the difference in inventory isnt a bigger deal to you. I just. I just dont see it as a fit. Max well, i appreciate your candor. Lemonis im very sorry. Max i am, too. Lemonis i wish you a lot of luck. Max thank you. Lemonis thank you. Max bye. Come on, zeusy. Lemonis max wants to play the role of an upscale business owner, but she doesnt want to deal with all the things that it actually takes to be a business owner. I was exhausted from her illusions. I was exhausted from her facades. I was exhausted from her flippant attitude. Amber you were exhausted. Lemonis i was. I was more disappointed. Kathy i mean, ill forgive people for making a mistake. Amber yeah. Kathy but theres got to be remorse. Lemonis or at least own it. Kathy right, own it and apologize. Amber right. Kathy like, you know what . Im really sorry. Will you forgive me . Lemonis i would be like, cool. Kathy im sorry. Can we move on . Yeah, and then we learn, and we grow. Lemonis you know what the biggest lesson for me was . When somebody doesnt like roscoes, dont do business with them. Kathy thats a good. Lemonis that was it. Thats our new filter. On our applications now for the next season, do you like roscoes chicken, yes or no . No . Sorry, i dont care if your business makes 100 million. Thats it. Kathy yeah. Lemonis im out. Kathy great vetting process, i love it. Lemonis kathy, thank you for joining us. We really appreciate it. Kathy oh, marcus, thank you. Amber thank you, kathy. Kathy thank you, amber. Lemonis everybody learned a ton. Kathy thank you, everybody. What an awesome team you have. Breannlemonis is what you dont have a bathroom . Breanne we do. [ laughter ] lemonis tonight on the profit, three family members have tapped into an rv revolution. Breanne were a vanconversion company. Lacey or a dreambuilder company is what i like to call it. Lemonis okay. In a growing facet of a multibilliondollar industry. Breanne its grown 540 . Lemonis . Theyre struggling to refine their process. People are like, i came to you because i like seeing staple guns. And their vanconversion business has stalled out. Breanne we cant afford our rent. We need to do something to survive. Lemonis their amateur workmanship. The finishing of the inside is really important, not having sharp edges by your head