tv The Profit CNBC May 3, 2016 12:00am-1:01am EDT
miranda: the lip gloss tis a healing lip gloss... woman: it's so smooth. lemonis: ...a cosmetic company that uses a special ingredient. miranda: this is my original formula, and it's got medical-grade lanolin. lemonis: it's a big idea with huge potential. miranda: and the company's grown from on my stove to a little over $3 million this year. lemonis: i'm impressed. but the owners won't stop developing new products. what is this? miranda: those are light-up tweezers. lemonis: products that no one wants. layne: these right here are all the bottles i can't sell. -lemonis: all the way back here? -layne: yes, sir. lemonis: and their branding is completely chaotic. -interesting? -katia: mnh-mnh. -lemonis: interesting? -katia: no, that's weird. it just feels all over the place. lemonis: if i can't get them to follow my plan... i don't feel like you're trusting me. ...and develop a whole new look... miranda: i see l's. lemonis: i see something that looks like a swastika.
...things could get very ugly for this company. miranda: if something happened to the business, i do worry about what would happen to us. lemonis: kansas city, missouri, is home to the lano company, a skin-care and cosmetics business that was started by miranda coggins in 2005. -miranda: high five, girls. -cristina: whoo-hoo! lemonis: after the birth of her daughter, milena, she was inspired to create a lanolin-based lip product with medical-grade benefits. layne: this is layne coggins with the lano company. lemonis: 10 years later, miranda and her husband, layne... -miranda: love you. [ smooches ] -layne: love you. lemonis: ...now have a company that generates millions of dollars in revenue. i'm excited to visit lano. and while it's a profitable business, i'm 100% certain that it has a lot of potential for growth.
the skin-care and beauty industry generates billions, and it's not just for women. -i'm marcus. -mccartney: hey, marcus. -lemonis: you are? -mccartney: mccartney. lemonis: mccartney, nice to meet you. -cristina: hi, marcus. -lemonis: your name? cristina: cristina. lemonis: cristina, nice to meet you. -miranda: hi! -lemonis: hi, how are you? -i'm marcus. -miranda: hi, i'm miranda. lemonis: hey, miranda, how are you? -is this your place? -miranda: this is it. lemonis: how long have you been in the business? miranda: 10 years. we started in my house. i had chronically chapped lips my entire life. and so my daughter was born -- she's now 11 -- and while breastfeeding, started using lanolin -- for breastfeeding -- on my lips. lemonis: the nipple gets chapped. okay. miranda: and i'm like, "oh, i'll put it on my lips," and they were healed for the first time in 30 years. lemonis: now, what is lanolin? miranda: lanolin comes from sheep. it's like an oil, like, a protective coating on their fur. lemonis: i think it's especially cool when somebody starts a business that is meant to solve a problem. sometimes necessity is the mother of invention. miranda: this is where we started. that's the lano lip. this is my original formula, and it's got medical-grade lanolin, jojoba, sweet almond oil, and vitamin "e" because in my heart,
my goal was to help people with chapped lips. lemonis: i love the name "lano lip" because it tells me what the story is. i like the fact that it's medical-grade. that tells me that there's some benefit, other than just looks. miranda: i understand. and this is all of our pure line. lemonis: what's inside of pure cosmetics? miranda: all of the lip gloss, all of the naturally based products. lemonis: what's this? miranda: this is our eye shadow that we came out with. lemonis: does this have lanolin in it? miranda: no. we have a whole nother brand called glam cosmetics. everything we do has got kind of a twist. this has got a magnification mirror. lemonis: is there lanolin in here? miranda: no. lemonis: i don't love the look of it. so, is the glam cosmetics really a totally different audience? -is it teenagers? -miranda: yes. lemonis: i think younger people today are more sophisticated. 1985 called, and they want their zebra stripes back. i mean, maybe when i was in high school and def leppard was out there, i guess it made sense. i feel like the fact that you came up with the lanolin as a solution is a great idea.
this other stuff -- i'm kind of confused. before i came to the lano company, i was under the impression that everything they made had lanolin in it. that was their hook. that's what separated them from everybody else. but i'm not sure why they moved away from that concept. -what does it cost? -miranda: retail for $5. lemonis: and what does it wholesale for, -if you were going direct? -miranda: $2.50. lemonis: what does it cost to make this? miranda: this particular packaging is 43 cents, not including the display; the display runs about $1. -lemonis: so, this is 32? -miranda: right. lemonis: and then another 3 cents for the package, -if you average it all in? -miranda: right. lemonis: so it's 46 cents, and you're selling it for $2.50. miranda: right. -lemonis: i mean... -miranda: it's not bad. lemonis: ...not bad. it's really good. those are good margins. miranda: so, this is our shipping area. this is where we keep everything that may need to go out, like, any internet orders. and i can show you here. so, this is pure illumination. lemonis: that's what this is called. who came up with the name -- what is this? pure illumination? miranda: i did. so, we put the same formula that we started with my lip balm in our lip gloss,
so it's purely based. other than the scent and the color, it's 100% all natural. lemonis: unfortunately, you can't tell people that it's 100% natural because you've added those things. miranda: this one has an l.e.d. light here. see? so, it's got a mirror on the side. so you can put your lip gloss on any time. lemonis: first, a line of cosmetics for teens. now a lip gloss that doubles as a key finder? way too bright. i came here believing lano was a brand, but i think that miranda just created some catch-all to make everything she thinks is fun. miranda: this is where we store all of our boxes. lemonis: what's in here? miranda: this is our makeup brush. it comes with 12 brushes. and so it's really great for travel. lemonis: literally, every time i turned a corner, i would see some other product that had no connection to her original story. i don't know how makeup brushes solve problems for people. -miranda: layne. marcus. -lemonis: how are you doing? -i'm marcus. -layne: nice to see you. lemonis: nice to meet you. miranda: layne does all of our numbers. lemonis: how much do you do in total sales?
layne: well, last 12, of course, are $2.8 million, but last year was $2.336 million. miranda: i'm the artist, and he's the practical one. lemonis: does that work for you guys? miranda: no, it does. i think going into business together was really tough at the very beginning. -lemonis: why? -layne: she actually just got so aggressive on buying a bunch of inventory 'cause she was so excited about the product that she created. she just wanted to sell a ton of it. and me, i was wanting to try a little bit of it and then let's see if it sells. she's kind of like that helium balloon. if you don't grab her, she's just gonna keep soaring away. -[ laughs ] -miranda: it's true. this is our production room here. hey, ashley, can you show marcus how you fill lip glosses? she's way better than i am now. lemonis: i think the thing that surprised me the most was their manufacturing process, if you want to call it that, where they basically line up trays of empty bottles, and, with a syringe, they essentially fill them one at a time. i did one.
-[ laughter ] -it's terrible. ashley: you did a good job. lemonis: that's, actually -- honestly, that's not easy. -ashley: no, it's not. -lemonis: you do it with this? -ashley: every single one. -lemonis: in big vats. i mean, i guess it's working if you're selling a couple thousand, but what if you got a 50,000-piece order? what's ashley gonna do -- sit here all day filling these bottles with a syringe? what i'm really trying to understand is who you are. miranda: right. lemonis: what's the main product that's creating the $2.8 million on this table? layne: those eye shadows, the brush sets, and definitely the gloss. it's 25%, 25%, and 25%. and so this particular product makes up 25% of your revenue -- $700,000. what does this cost to make, all-in? layne: depending on the colorant, anywhere from, say, $1.76 to $2.02. lemonis: what do you sell this directly to a salon for? layne: $10. -lemonis: so $8 in margin. -layne: yes, sir. lemonis: so, there's lano lip, which is what your original product was, and that makes up what percentage of the $2.8 million? layne: 3% max. miranda: max. lemonis: what a bummer that is. miranda: i agree.
lemonis: so, the premise of the whole company -- miranda: ...was lost. lemonis: well, it's not lost. it's gone. i'm sure all these products are great, but you have to admit you are kind of all over the place. miranda: no, i think layne wants to go where the margins are. layne: we were really just kind of going where the money was. lemonis: you were chasing the money. the minute somebody else comes around that'll make that thing for 10 cents less, you're gone, and you really end up with a table full of stuff that doesn't really tell me who you are. this lack of direction and this lack of clarity, while it may be making them a little bit of money today, this is not a sustainable model. -do you have the financials? -layne: mm-hmm. lemonis: i'd like to go over them and really understand them more -- like, the balance sheet, p&l. -both: okay. -lemonis: thank you. so, how is the equity split between the two of you? miranda: 51% woman-owned, and then 49% layne. lemonis: well, at least you're 51%. at least you can kick him out at any time. miranda: i tell him that all the time. layne: i've been begging. everybody's like, "what are you doing?" i go, "i'm a guy selling cosmetics.
-i'm living the dream." -miranda: living the dream. -layne: [ laughs ] -lemonis: very funny. so, is there only one entity, or there are multiple entities? -miranda: only one. -layne: there's one. -lemonis: okay. -layne: yeah. lemonis: so, $2.3 million in total revenue in 2014. layne: '14. yes. lemonis: after cost of goods, gross profit was $1.5 million. so really good margins. total operating expenses a year are $1.1 million. miranda: that's with payroll, rent. lemonis: so, with $400,000 in earnings. i mean, you guys do well. miranda: obviously, financially, we're not failing, but we want to do better. lemonis: without you being offended by it, your business is failing, just not financially. i'm very concerned about the fact that it's -- today's -- it's like the flavor of the day. you're selling lots of different beauty products, and you're making good money on it but with no sustainability. there's two ways to run a business -- for today -- and you guys are doing a great job -- and for tomorrow. you guys have to figure out if you want to run it for today and tomorrow or just today.
miranda: i don't want to fail. i want to be very successful. it's my blood, sweat, and tears for 10 years. you know, it's our family. it's our marriage. you know, if something happened to the business, you know, god forbid, i do worry about what would happen to us because it's become such an integral part of our marriage, too. it's everything for us. for real. lemonis: and you guys have a good dynamic together. miranda: well, can you help me? lemonis: the answer is yes, i can. but i have zero interest in makeup brushes, blushes. i have zero interest in that. i see a real opportunity to take this lanolin story and then have a core product and then create product extensions around it. my ultimate goal here is to create a hub-and-spoke model, with the hub being lanolin. that's the foundation. that's the story behind the business. and off of that hub are all these spokes. those are products that are based on the story.
they use the ingredient from the middle of the hub. and when you build that foundation and you build that brand and you build that product lineup, it's got to have lasting power. we want to have a business that's built for time. miranda: i'd like to see it. -lemonis: so, good talk. -layne: yes, sir. miranda: thank you, thank you, thank you for everything. lemonis: nice meeting you. thank you. [ indistinct conversations ] -hey, there. -miranda: hey. -layne: hey, marcus. -lemonis: how are you? miranda: good, how are you doing? -lemonis: good to see you. -miranda: good. thank you. good to see you, buddy. how are you? so, what did you guys think about after i left last night? miranda: you've got 10 years' worth of work on the table, and you said, "it looks like crap." you know, it bothers me, but -- lemonis: did i say that it looked like crap? miranda: you said it looks like '80s, about glam, -and you said, "this is --" -lemonis: does glam sell? miranda: no, it doesn't. lemonis: you guys, with all candidness, have built a nice business.
most people would say, "we're doing great." -layne: right. -lemonis: and so i feel strongly that you know that you want to do something, but you're just not sure what it is. layne: you know, i mean, i know it, and all due respect... lemonis: what is it, then? what is it? layne: ...i'm not sure you know the exact direction we should go. lemonis: oh, i know what the direction is, but i didn't come here -- i'm not a consultant. i don't just lay out the plan for you. -layne: i know that. -lemonis: and so if you know what the direction is, what's the direction? miranda: i think that if anybody's gonna help us, it could be you. lemonis: i believe in what you guys are doing...to a degree, and you're definitely not a failing business, but you are a struggling business. i want to make an investment in a product that i think could be pretty amazing. so my offer is $500,000 for 30%.
i think with that $500,000, the company should have sufficient working capital to be able to grow and allocate $100,000 of the $500,000 to new product development, new packaging, new branding. you said to me yesterday, "can you help me?" miranda: right. lemonis: and i'm telling you that i can. i'm gonna give you guys a minute to talk without me, okay? -layne: okay. -miranda: okay. it's a lot of equity. layne: 30% is a lot. you're right. -miranda: are you worried? -layne: mm-hmm. miranda: nobody says we have to make a decision right now. i don't think we just give up 30% that easily. lemonis: for business advice and extra scenes from the show, log on to...
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lemonis: so, my offer was $500,000 for a 30% stake in the lano company. miranda: we would like to counter you with $500,000 for 20%. giving up 30% of your baby -- a little bit tougher than i'd like to swallow. lemonis: what do you think the business is worth? layne: somewhere in the realm of $5 million. lemonis: on a business that makes $400,000? layne: based on what next year actually is forecasted to do and p.o.s that are in hand for then. lemonis: i struggle with the business being worth $5 million today. miranda: what would be your game plan?
lemonis: are you interviewing me? 'cause if you are, then we shouldn't do business. 'cause i have enough of a track record that i shouldn't have to tell you what my game plan is 'cause, candidly, you don't have a game plan at all. when i think about investing $500,000, it could be years before i get something. what i would be willing to do is give you $500,000 for 20%, but i would want a guaranteed return on investment on an annual basis. and so it's basically what's called a preferred investment, which means that i would get 10% on my money every year no matter what, which is $50,000 a year. and then we share in the profits above that... -layne: right. -lemonis: ...80%-20% 'cause i don't want to take your baby, but i don't want you taking my 500,000 babies. if you're gonna get a return -on your 80%... -layne: mm-hmm. right. lemonis: ...i would like to get a return on my 20%. miranda: i think that that's a pretty good deal.
don't look at me. lemonis: when we shake hands, the deal becomes effective the minute we shake hands. you're tough. -i have good credit. -miranda: [ chuckles ] you okay? layne: i prefer the 20% with the 10%. miranda: i agree. layne: you're selling your baby. now you got a stepdad? [ both chuckle ] lemonis: we have a deal? miranda: we have a deal? we have a deal. okay. -lemonis: congratulations. -miranda: thank you. lemonis: now, you know that for a period of time... layne: i know. -miranda: we know. -layne: you got us. lemonis: ...i am 100% in charge. miranda: we know. -layne: thanks again. -lemonis: thank you. what a good-looking group. [ laughter ] so, miranda and lane and i made a deal for me to invest $500,000. i'll own 20% of the business, and they accepted the fact that i was 100% in charge. and so we're going to challenge every single thing we do
from coming up with consistent branding to developing new products. and then we want to take lanolin, the thing that made us who we are, and find new ways to expand on that. we're gonna look at manufacturing, and we're gonna potentially outsource it. what is your biggest fear? ashley: taking away my job security. woman: oh. -ashley: for sure. -[ all chuckle ] miranda: you will always have a job, no matter what. you've been with us for a long time, and, ashley, we're only gonna get bigger and better, i promise. lemonis: let's get back to work, all right? -thanks, ladies. -miranda: thanks, guys. [ siren wailing in distance ] -man: i know you. -lemonis: hey. today i brought miranda and layne to new york city to meet with birchbox, a very influential online retailer. while i'm hoping to build a long-term relationship, i also want feedback about the products and the brand.
i believe in the lip gloss, and i think that this is a perfect item for birchbox. it's a good opportunity for us to show them our product, get them excited about it, and build a new relationship. miranda: okay. i'm a little bit concerned. i'm not very prepared. lemonis: sometimes you got to be good on the fly. i have no worry 'cause i trust you, and i know that you're gonna do a great job. -miranda: okay. yes. -lemonis: okay. great. -miranda: hi. i'm miranda. -katia: i'm katia. -miranda: hi, nice to meet you. -layne: i'm layne. lemonis: every month, birchbox delivers beauty samples that are custom tailored to their subscribers. getting our lip gloss into birchbox would put our product in front of hundreds of thousands of potential customers. katia: i'd love to hear a little bit about the product inspiration. miranda: my whole thing is i had chronically chapped lips. so, lanolin actually can help people with chapped lips. so i started looking for a lanolin lip balm, and there wasn't one. and that was 10 years ago, and the company's grown from operating out of my house to -- we'll do a little over $3 million this year. this is our lip gloss -- pure illumination. so, you push the button here. yeah.
and so, then you un-- there's a mirror right there. katia: the mirror is, like, amazing, and it's so obvious. layne: honestly, we get more compliments on the mirror -than we do the light. -katia: i don't love the light. and, also, if i was at a bar and i put on my lip gloss and all of a sudden, my face was lit up, i think i would feel a little strange. what is the price point? miranda: $20 retail is what these retail for. katia: okay, so that's, like, actually a higher price. -i'd say this is -- -lemonis: $14? katia: yeah, i was gonna say sub $15. but you could change the packaging and really change the perception on pricing and keep it at $20. is the pure -- is, like, the natural aspect of it gonna be, like, part of this? miranda: it's mostly pure, but except for the colorant and the scent. katia: it's tough to say it's pure. you can get natural color. i think that there is something to that. we see major trends in customers caring about ingredients. lemonis: birchbox has over 1 million subscribers, and katia filters their feedback. so she's an amazing resource. i wanted to get her feedback on as many products as possible.
-interesting? -katia: what is that? miranda: so, we're doing a whole, like art deco theme. -this is an eye-shadow palate. -katia: no. lemonis: interesting? katia: uh, no. that's weird. we really think in brand. it just feels all over the place. lemonis: i am floored by how much crap is in this space. -throw money in the garbage. -miranda: i don't want to! lemonis: throw it in the garbage.
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or if you're young or old.are if you run everyday, no matter who you are a heart attack can happen without warning. if you've had a heart attack, a bayer aspirin regimen can help prevent another one. be sure to talk to your doctor before you begin an aspirin regimen. bayer aspirin. katia: we relemonis: how do you feel justabout the name "lano"lace. and a full-product set that explains the story and what the primary ingredient is? katia: i like it. lemonis: much like burt's bees did with beeswax, right? katia: beeswax. yeah, i think that's really cool. lemonis: are we onto something in that? katia: i think it's super-smart. lemonis: so, if we made a commitment to sample 100,000, is that something you'd be willing to try? katia: i think the right time to get, you know, 100,000 samples in people's hands, who are gonna photograph it, put it on instagram,
is when you are sure that this is the company, this is the brand. lemonis: so we have some work to do. thank you so much for your time. we really, really appreciate it. miranda: thank you so much for all your feedback. -katia: congratulations. -layne: thank you. lemonis: now that we understand directionally where we want to go, i want you to come up with 6 to 10 products all using lanolin, and at least 50% of them have to be unisex. miranda: how long do i have to do this? lemonis: a couple weeks. -yeah. -miranda: you're asking me to reinvent the wheel in a couple weeks? lemonis: yeah. miranda: i mean, two weeks to turn all of this stuff that you want me to do is a really short period of time. packaging -- i want to make sure to get it right. lemonis: i'm gonna take you somewhere that i think will be a good resource for you. miranda: 10 years, i've done it all on my own, so it's different. lemonis: you got us. we're not much help, but we're here. miranda: [ laughs ] -lemonis: let's head in. -miranda: okay. lemonis: rejuvenol basically helps beauty and cosmetics companies to manufacture anything from shampoo to lipsticks to lotions.
they do all of it, from manufacturing to packaging. bart: this is all new. we moved into this building three years ago. so, when i started rejuvenol, we dedicated ourselves to the small beginning user that grows with us. every piece of equipment in here is new. lemonis: so, i've done some other projects with bart, and they've turned out really well. what is a product that you can make using lanolin? julio: anything. anything -- anything, pretty much. miranda: i've not made lipstick, personally. lemonis: so let's do that. julio: so, what i do is you just weigh the base, right? you melt the base, and then if you want to add... miranda: a little bit. julio: ...a little bit of lanolin... so, the way you do the colors, you use this machine here. miranda: pretty color. julio: and then you pour the sample here. and when the lipstick is cold, you just flip. lemonis: i'm just gonna tell you right now that's pretty cool. julio: and that have lanolin in it it. [ laughter ] lemonis: do you want to seehe factory? miranda: yeah, i would. yeah, i would love that.
bart: we actually make our own bottles, too. -layne: oh, really? -bart: this machine is running. this is a proprietary bottle to us. lemonis: so, do you know how that works? miranda: no, i've never seen it. lemonis: it starts like a bullet. layne: yeah. and then it blows out like that. lemonis: rejuvenol charges a fee -- roughly 5% to 6% on top of their manufacturing cost. but if they produce our products, we'll be able to fulfill orders much quicker and at a larger scale. and so you start to really think about it -- the sense of becoming kind of like a one-stop shop. miranda: i know. it's great. lemonis: if i wanted to keep everything in house, it would require me to spend several million dollars. you need to invest in almost 10 to 12 pieces of heavy-duty machinery. why would anybody on the earth want to have to invest in all of that when they can just do what they do best? you guys are salespeople. miranda: i think it would be great to have somebody else if we're gonna develop new products. it sounds like they'd be a great partner. lemonis: it's time to head back to kansas city
and to start the process for designing this new product line. thank you very much. appreciate it. -how you doing? -ashley: good. -how about you? -lemonis: good. i wanted to sit down with ashley because once we made the decision to go with rejuvenol, i want her to feel informed about all the changes and not get caught off guard. i can sense your concern about stuff changing. this idea of us not manufacturing -kind of freaks you out, right? -ashley: oh, yeah. if we, like, took the filling away from here, i don't know how i would get my 40 hours a week. lemonis: mm-hmm. they've been very honest with me that nobody's gonna let anything happen to you. nothing. while i'm having this conversation, i'm looking out of the corner of my eye, and miranda was lurking. she wouldn't even let me have a discussion with one of her employees without her standing over there monitoring what i was gonna say.
ashley: i need this job to make ends meet. lemonis: i think you have to just trust people. and so if they're telling you that you're gonna get your hours, i think you got to just believe in what they tell you. it's gonna be okay. ashley: but i do love my job in here, marcus. lemonis: i know you do. keep your head up. it's obvious to me in this moment that miranda doesn't trust me. if this relationship's gonna work, it's gonna have to be built on trust. hey, miranda, is this, like, the flavor-of-the-month club right here? -miranda: yep. -lemonis: what is this? miranda: those are light-up tweezers. lemonis: you didn't show me this last time i was here. -is there anything else? -miranda: yeah. lemonis: there's more stuff? miranda: there's all kinds of stuff. lemonis: as i'm kind of just taking a surveillance of things, all of a sudden, i now see all this other stuff -- things that look like they're not on brand. miranda: this is a box that we have lots of different colors in. -did you see this one? -lemonis: no.
miranda: but no more trinkets like that. lemonis: how much do you have in inventory that is not your core business? layne: $108,000, $109,000. lemonis: of just... layne: most of it is glam products. lemonis: and who ordered it all? miranda: i order everything. lemonis: i asked layne to take me to the back of the warehouse, without miranda, by the way. so, where is all this glam stuff? layne: every one of those are full displays. yep. lemonis: i am floored by how much crap is in this space. did miranda order this kind of, like, on her own? layne: yeah. i mean, i got 30,000 bottles back there i can't sell. lemonis: which one are those? show me that. i've been here for several days, and i can't believe what i'm just seeing for the first time. and so you want to show me a profit-and-loss statement that says you make $400,000, well, hundreds of thousands of dollars in dead inventory in the warehouse -- those are losses. so, really, all this is garbage. layne: pretty much. lemonis: it was mistakes with packaging, bottle caps that were bad, containers that were bad.
my god. look, i know why you sell the brushes and the little accessories -- 'cause you're trying to just create enough cash. but at the end of the day, we're literally throwing money in the trash can. layne acknowledged to me that it was kind of out of his hands. layne: it's a little bit different to tell your wife something and her not take it personal. if i have you in there saying the same thing i've been saying for a year, it makes it seem like second nature, like, "well, okay, a couple people have told me. i know we've got to take the right step." lemonis: well, at least if i'm tough on her, she can come complain to you -and you can console her. -layne: sure. lemonis: if you're tough on her, you got to go home with her. and so i decided to grab miranda, and i wanted to show her that while they may be successful in one sense, this is not success. how did stuff like this happen over the years? miranda: i mean, i got super-excited, and i over-ordered. lemonis: but i'm gonna tell you what layne won't tell you. miranda: okay.
lemonis: when you make these mistakes, it craters companies. he said that you guys donated $100,000 last year of bad product. there's another $75,000 of product here. there's more glam product inside that's bad. have you ever thrown money in the trash can, literally? miranda: mnh-mnh. -lemonis: come with me. -miranda: i don't know. -lemonis: come on. -miranda: can't we sell those? lemonis: come on. miranda: can we re-package them? lemonis: if your business is in trouble and you need my help, log on to... ♪jake reese, "day to feel alive"♪
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because you can't build the business of tomorrow lemonis: throw money in the garbage. miranda: i don't want to. lemonis: throw it in the garbage, literally. miranda: [ grunting ] okay, i got it. lemonis: that's what throwing money in the trash looks like. miranda: doesn't look very good. i mean, it sucks. it sucks. lemonis: you can't be just going out and buying stuff. miranda: i'm not. lemonis: but i just saw tweezers. miranda: well, that, no. we've already got a p.o. for that. lemonis: but you could get a p.o. for anything. miranda: i'm worried about pissing off my customers, or our new branding upsets them. they're not gonna continue with their millions of dollars' worth of orders. lemonis: do you know what that basically says to me? "i don't trust you with my business." tell me why, when i was talking to ashley, you felt the need to stand there while i had a conversation. miranda: because i'm protective of her. 'cause i care about her and i care about our employees and i care about how they feel. lemonis: you're making it sound like i'm not worried about them. miranda: okay. i think you can be kind of scary sometimes.
you can be intimidating. lemonis: have i tried to intimidate you since i've been here? miranda: you just do on accident. lemonis: you standing there and kind of monitoring what i'm telling people makes me not want to be here. i'm willing to trust you, but i want the same in return. miranda: okay. lemonis: no more throwing money away. miranda: no more throwing money away. lemonis: okay. you are tough. holy... miranda: you're tougher. [ laughs ] -lemonis: how have you been? -miranda: good. lemonis: new packaging, new products. miranda: new everything. lemonis: two weeks ago, i asked miranda to rethink her whole product line and pare back the number of things she was carrying. i also wanted her to focus on products that only have lanolin in them. miranda: basically, i came up with all products that have lanolin. lemonis: okay. miranda: these are 100% all-natural lip glosses. lemonis: so, these are new? miranda: uh-huh. yeah. these are brand-new. lemonis: i like the fact that you went to 100% natural. -miranda: yep. -lemonis: next.
miranda: i'm very excited about my lip balm. i wanted something that was a matte finish for men but also that we can put into a stick, like a chap stick. lemonis: this feels good. i'm not gonna lie. miranda: aftershave lotion with lanolin in it. lemonis: okay. miranda: it's very smooth. it's real creamy. and it's not, to me, real sticky. lemonis: the consistency's a little off, but i like the scent a lot. miranda: i do. i like the scent. very clean. lemonis: i'll put that here. miranda: and then i've got hydrating shampoo and conditioner. lemonis: smells nice. miranda: yeah, i like the smell. lemonis: and so all of this essentially fits around the lanolin hub and spoke. -miranda: yeah, absolutely. -lemonis: okay. i'm really proud of miranda. she really got focused, and she stayed away from the gimmicks. and the products that she's created are unique to lano. i'm starting to see the birth of a real brand. so let's now see the packaging. miranda: this was my top choice out of all of those. i like it because people will see this and know that it's us. lemonis: ah. what do you see in that logo? miranda: i see l's.
-lemonis: you see l's? -miranda: yeah, i see l's. lemonis: i see something that looks like a swastika. miranda: oh. i didn't see it until you just said that. -lemonis: is layne here? -miranda: yeah, he's here. lemonis: all right, so, i'm gonna grab him real quick, okay? miranda: yeah, yeah, yeah. lemonis: so, we're looking at these logos... -layne: yes, sir. -lemonis: anything else you see in the l's if you stand back and look at the image? what it could look like. shelly: are we going with swastika? [ laughter ] layne: oh. got ya. no, i didn't see it, but okay. it can absolutely be perceived by some. sure. miranda: we don't want them to perceive anything badly. layne: i mean, i liked the raindrop as far as an "o" on some of them, but, i mean, there were so many different ones that could be utilized in so many different ways. lemonis: this feels very feminine to me. this feels cheap to me. i don't like the bamboos because i feel like it narrows the audience. i like the fact that they took the initiative to come up with their own logos, but, quite honestly, they took a lot of swings. most of them were misses. i like the color palette, but once we get the logo right, i think we may have just found it. i love the fact that we're saying "lano."
i feel like if we could just somehow modify this enough to have there be, like, no chance... -layne: right. -lemonis: ...at all that there's any sort of, like, somebody can do this and all of a sudden be like [gasps] miranda: yeah. megan: hi, guys! how are you? miranda: good. i'm miranda. megan: hey, miranda. i'm meg. nice to meet you. lemonis: i wanted to take miranda to parlor, a very popular salon in kansas city. i wanted to get a wide range of audience to give us feedback on the product and the packaging. i know that you guys don't have dry elbows, but this can be used elbows, heels, cuticles. -is it nice? -woman: mm-hmm. miranda: this is phenomenal lotion. -rub it on the top of one hand. -woman #2: okay. lemonis: we have a whole line of cosmetics. so lanolin is at the middle, and off of that are a bunch of products. miranda: all that have lanolin benefits to it. man: awesome. feels like it would stay on for a long time, too.
miranda: it soaks in 'cause it's medical-grade lanolin, jojoba, sweet almond oil, and vitamin "e." lemonis: check it out. put it on your blue hair. man: i don't want to put it -- i just washed it today. -lemonis: you did? -man: [ laughs ] yeah! miranda: so, the lip gloss is a healing lip gloss. it's medical-grade lanolin, jojoba, sweet almond oil, and vitamin "e." there's a mirror on the side and an l.e.d. light on the top -with the mirror, so try it. -woman #3: oh. oh. okay. i got it. miranda: yep. woman #3: i like the idea of it. it's kind of weird lighting. woman #4: it's just, like, really bright... megan: it's just not my deal. layne: what do you think we would need to do to actually bring something into qvc that works for you all? ariana: items that we don't like -- sea salt and scrubs are a little challenging. not the candle.
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♪ sales department-this is nate. human resources. technical support. hold, please. [announcer]you work hard to grow your business. [man] yes. i can totally do that for you. [announcer] working together, we can help your business thrive. wells fargo. together we'll go far. woman #2: it's just, like, really bright... woman: kind of weird lighting. -megan: it's just not my deal. -miranda: right. megan: but i could see a lot of women that may find it useful. miranda: it helps to tell our story, and i'll tell you why. i had one person today that said, "somebody brought in your lip gloss 'cause they thought it was so cool because it had a light and a mirror." so i know that it helps sell the product, and it differentiates us from everybody else. woman #3: ...see what you're doing.
lemonis: and do you like the light? woman #4: yeah, i love the light. woman #5: it's cool. woman #6: maybe a little... lemonis: would you buy it just because it has the light? woman #4: oh, yeah, 'cause it's different. lemonis: okay, that's good feedback. well? miranda: i loved the feedback. lemonis: i did hear a lot of comments about people saying it was bright. -miranda: right. -lemonis: and so i think we want to dim it down a little bit. but all in all, i feel good about it. so, i put a lot of thought into the discussions we've had over this logo. one of the things that i feel like is missing is "medical grade." you kept telling me "medical-grade lanolin." -miranda: okay. -layne: okay. lemonis: a logo's important because it's a name, and it tells a story. and i knew that miranda was hanging on to "pure," and i was hanging on to "lano." and so i wanted to give her something that i felt brought the two together. what i like in logos is i like them to tell stories. -miranda: mm-hmm. -lemonis: because it's the thing that differentiates us -from everybody else. -miranda: right. lemonis: it's pure. it contains lano.
we belive that it's good for you, and it's natural skin care. ashley: i like it. it's clean. i think it's great because a lot of our customers might remember us from pure cosmetics with the lano company. and it's combining all of the above in one. lemonis: this should mean "healing." what do you think of when you see that little symbol? ashley: dollar signs coming in -- plus, money. [ laughter ] that's what i'm thinking of when i see it, anyway. it's plus. lemonis: if you can sell your product on qvc, i think it's safe to say you've arrived. miranda: yeah. lemonis: i flew layne and miranda to west chester, pennsylvania, to the world headquarters for qvc. they're the biggest shop-at-home network anywhere. they reach over 300 million homes and generate over $8.8 billion in revenue. so the product's here. we'll just get it all unpacked. -layne: right. -miranda: yay!
-how do they look? -layne: real good. -look at this. -miranda: [ gasps ] yay! oh, look how pretty. lemonis: the new packaging on the products looks great. and today we're here to convince them that the lano products belong in their lineup. miranda: so, we're excited to be here. we've been in business for about 10 years. i actually started the company on my stove 'cause i had chronically chapped lips and never could find anything that worked. so i breastfed our daughter and found that while using medical-grade lanolin that my lips were healed. so, looked for a lanolin-based lip balm, couldn't find one. so i decided to mix one up on the stove. and that's how the whole company was born. lemonis: isn't that a great story? ken: it is a great story. lemonis: and i think people will relate to that. -rachel: mm-hmm. -ken: oh, absolutely. lemonis: the brand that you see on there today -- pure+lano -- if you think about a hub-and-spoke model, lanolin's at the hub, and all the spokes are all these products. miranda: this is our hand cream. it's got natural antioxidants, like a shea butter, vitamin "e."
it's got the acai berry. rachel: oh, it smells really good. miranda: it's just phenomenal. so, this is our antiaging hand, neck, and face cream. and so it has a patented antiaging ingredient that actually helps promote collagen in the skin. and it's antiaging. two, we've got a whole sea-salt body-scrub cleanser that is absolutely phenomenal. we also -- i wanted to tell you this -- this is our lip scrub. it buffs off all that dry, dead skin, and then you've got a soft, you know, scrub over it. layne: and i'm sure you'd want to test the items and things like that, but what do you think we would need to do to actually, you know, be able to bring something into, you know, qvc that works for you all? ariana: items that we don't like -- sea salt and scrubs are a little challenging. rachel: this would be along with the body scrub, though. ariana: you're right. it's not a category we really have a lot of strength with right now. not the candle.
lemonis: i'm always excited when i go into a new business and we re-brand. but one of the keys to doing that is making sure that your paperwork is right so that this new name that you come up with, with your new product that you're about to launch into the market, spending hundreds of thousands of dollars, is protected. and so a service like legalzoom provides small businesses an affordable way to do all of those things. it offers a network of lawyers. it offers great research and information. i would recommend it to any small business. the full value of your totaled new car. the guy says, "you picked the wrong insurance plan." no, i picked the wrong insurance company. with new car replacement, we'll replace the full value of your car us depreciation. liberty mutual insurance.
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and keep a nice barrier on them. all of our products have lanolin in them. rachel: i mean, that, i think, is really the fun part of the story 'cause how many women use baby lotion as lotion? miranda: i can't tell you how many people we've met at trade shows and they pull out their tube of lanolin and they go, "oh, my god! you are so smart!" lemonis: would you mind trying the hand cream? -miranda: yes. -ariana: sure. lemonis: how does that feel on your hands? rachel: it feels nice. it feels like it's gonna take a little longer for it to actually soak in. and it could just be because of the amount of lanolin in it. -miranda: right. -rachel: but, i mean, as i'm sitting here, it's almost gone. miranda: this is really what got our company to the next level. we've now formulated it to where it's 100% all natural -- all-natural colorant, all-natural scent. and then it's got an l.e.d. light and a mirror on the side. so if you would, try it on your lips.
rachel: it's actually really... it's very smooth. it's very, very -- i didn't expect it to be that smooth. it's very smooth. ariana: we don't really have this ingredient at all, so that's very different. -lemonis: is that a good thing? -ariana: it's a good thing. so we're always looking to fill a void. exactly. ken: i think what you're doing here makes a lot of sense. so i think if we move really, really quickly... i mean, that's kind of what the strength of our company is -- our ability to move quickly and be nimble. so i think, depending on your ability to get set up as a vendor, all that kind of stuff, we could be on the air in 60 days. miranda: awesome. that's great news. lemonis: well, this is exciting. hopefully, we'll be on in 60 days. we'll try. we'll do our best. -thank you so much. -rachel: thank you. miranda: thank you so much. i appreciate it. lemonis: establishing a relationship with qvc was a huge accomplishment. and now we need to get our focus off manufacturing and onto sales. and that means ashley will be moving on to the sales-and-marketing team. and why would my customers buy this?
ashley: because we have over 20 different colors to choose from and because it is made with medical-grade lanolin. lemonis: you know what you're doing. ashley: thank you. lemonis: now that we've decided to move all of the manufacturing to rejuvenol, we no longer need a warehouse. hello! good morning! so i took layne and miranda to look at a new office space in downtown kansas city. woman: the rent is $3,000 a month. it's about 2,900 square feet. lemonis: you could turn this into a display wall, and you could turn that into a display wall and really have this be a live salesroom. miranda: it's so much more professional than what we've got. lemonis: let's look at a five-year. -woman: okay. -lemonis: okay, great. also, we're headed back to new york city to birchbox's only retail store in soho. miranda: moisturizer and body wash. lemonis: you just set up yours. i wanted katia to see the progress that we've made. i wanted our lip gloss to be carried in the sample box. and i wanted our product on the shelves. -katia: hi! -lemonis: hi, katia. how are you? good to see you. so, we made a lot of progress in a short period of time. katia: i'm kind of already taken aback 'cause on the table that day was so much product, and it's a lot fewer.
i think it looks high-end. lemonis: katia was legitimately impressed by the new look and how we've focused our product line. katia: we'd be super-excited to have you. and just from one entrepreneur to another, so impressed. -miranda: thank you so much. -lemonis: it was easy, right? -easy process? -miranda: [ laughs ] lemonis: and since she's asked us to be a part of her monthly subscription and her retail store, i expect our revenue to double within the year. we're excited to do business. miranda: thank you. i appreciate it. -katia: we don't do that. right? -miranda: give me a hug. i appreciate it. -katia: great to see you. -layne: thank you so much.
>> farnoosh: tonight on follow the leader. >> we hit our five-year number in seven months. >> farnoosh: just six years ago, katia beauchamp hatched an idea in business school and turned it into a $500,000,000 business. >> so amazing. >> farnoosh: that company, birchbox, delivers custom-curated boxes of beauty product samples to over 1,000,000 subscribers and has a popular e-commerce site where customers can buy full-sized products as well. >> what is the next step to making sure that we can get this done in time? >> farnoosh: they even opened a flagship store in new york city. >> katia: the store was a question and a hypothesis. and the results have just been really exciting. >> farnoosh: but for the first time, katia is facing strong headwinds. she recently cut 15% of her staff, suspended operations in canada, and saw her co-founder resign.