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tv   The Profit  CNBC  August 16, 2016 1:00am-2:01am EDT

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a brooklyn shoe company that made a splash with its dazzling designs. dan: the idea of the company is to use global textiles and global inspiration. lemonis: but the c.e.o. can't stop shooting himself in the foot. dan: my financial decisions negatively impacted the company. lemonis: his lack of discipline has cluttered the shelves with products that won't sell. dave: you know, there's 10 new ideas that come out. one of them's great; the other nine are, like, terrible. just awful. like, just suicidal ideas. lemonis: alienating his partners... david: daniel, i told you this, and you did it anyway. lemonis: ...and pushing the business to the brink. how much money's in the bank account today. dan: [ groans ] not a lot. lemonis: if i can't get him to focus his energy... this store's kind of a joke. ...and start following my process...
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i'm giving you all these assignments, and you keep failing at them. ...inkkas will go out of style forever. my name is marcus lemonis, and i risk my own money to save struggling businesses. we're not gonna wake up every morning wondering if we have a job. we're gonna wake up every morning wondering how many jobs we have to do. it's not always pretty. everything's gonna change. everything. but i do it to save jobs, and i do it to make money. this... let's go to work. "the profit." ♪ in 2012, dan ben-nun partnered with his brother, dave, and his childhood friend david malino to launch inkkas, a footwear company based in brooklyn, new york. dan: authentic textiles, responsibly sourced, hand-crafted. and our new logo. -david: it looks good. lemonis: inspired by dan's travels, the shoes incorporate patterns and fabrics
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from around the world, giving them a bold and colorful look unlike anything on the market. dan: and the beauty about a printed textile is that you really have unlimited combinations that you can do. lemonis: but while dan has created some real hits, too many of his designs have bombed, leaving the company with big losses. david: nobody's buying our new stuff. it's a disaster. lemonis: and with cash running low and debt mounting high, these entrepreneurs can only wait for another shoe to drop. dan: we need to see increases in sales, or we could potentially go out of business. lemonis: the shoe industry does over $48 billion annually, and everybody needs a pair of affordable, cool shoes. if i can help these guys overhaul their process and harness their creativity, it won't be long before they're off to the races. ♪ today, i'm meeting the inkkas guys at their storefront in greenpoint, which is a trendy neighborhood in brooklyn.
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right away, i'm wondering what sort of retail store this is. i mean, yeah, there's some shoes on a shelf, but behind that, there's a sea of desks and computers. it looks like a trading floor of some stock exchanges was parked behind some shoes. hi. dan: hello. -lemonis: hello. how are you? i'm marcus. -hi, nice to meet you. daniel. lemonis: daniel, nice to meet you. dan: this is my older brother. -lemonis: how are you? i'm marcus. -dave: good. nice to meet you. lemonis: nice to meet you. -dan: and this is my best friend, david malino. we've known each other since we were about 14 years old. lemonis: okay, so, it's like a three-dimensional experience. dan: three d's. lemonis: so, is this pretty much it? dan: this is the company right here. you're looking at it. lemonis: can you guys kind of maybe all come out and show me the product and how it started, why it started, give me a little back story? dan: sure. the idea of the company is to use global textiles and global inspiration in footwear. in 2012, i was backpacking through south america, and i come across some local artisans that are making footwear using peruvian textiles. and i was like, "this is an incredible idea.
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i was blown away." lemonis: would this be an example of a peruvian textile? dan: correct. but i didn't see it made in a footwear that would be attractive to me or you. but i thought to myself, "hey, if you took this and you put this on a shoe form that we love, this could be an incredible idea." and it also occurred to me -- lemonis: how much coffee did you have this morning? jesus, man. dan: i'm just like this normally. this is normal. -lemonis: is he like this? is he a little amped up? -david: yeah. amped up. dan: because i'm officially the c.e.o. -lemonis: okay. -dan: every single product you see in here, i've been involved from start to finish in designing the product, sampling the product. lemonis: so when people come in and like the design, that's attributable to you. dan: correct. and when they don't like it, that's also attributed to me. -lemonis: okay. dave: he's the ideas guy, so he comes up with a lot of ideas. i'm in charge of operations. i make sure that everything runs in the office. i keep an eye on inventory. i deal with all the finances. lemonis: what's left for you to do? david: well, i mean, i handle all the manufacturing, all the sourcing. lemonis: you're picking the factory, as well? david: yes, i picked and activated our current manufacturing facilities in mexico.
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i shipped all the textile from peru to mexico, which is no easy feat. lemonis: and where did you get the experience to do that? -david: dropped in the fire. -lemonis: super-impressive. great job. -david: appreciate that. lemonis: yeah, really great job. what i'd like to do is try some shoes on. so, i'd like to try the high top, the slip-on, and this, as well. let's try a 10 and an 11. dave: all right. woman: so, we didn't have the specific jogger you wanted. -lemonis: not in any size? -woman: no. but we do have another jogger. they all pretty much fit the same. lemonis: oh, but i wanted to buy that one and wear it. what size was this one? -dan: that was a 10. lemonis: this feels big on me. i'm not gonna lie to you. this shoe is not comfortable. the shoe was good-looking, but the sole was too thin. it's, like, totally flat. woman: the slip-on we had in a 9 is the candy pink. lemonis: no, i wanted the light-blue one. woman: that we don't have. [ chuckles ] lemonis: [ chuckles ] i've asked for three different shoes, and you don't have them. dan: and that's because we've continuously had problems
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with inventory since the beginning. lemonis: you probably shouldn't be in the retail business. how much revenue is generated out of this store? dave: it's definitely not significant. i would say 3%. online store's 30%. and then wholesale accounts -- 70%. lemonis: it's no wonder to me that the retail store's making up a fraction of what their wholesale and their internet business is. when you come to a retail store, you expect them to have inventory. every time i asked for a shoe, they were out of stock. it would be like going into starbucks and them saying, "sorry, we don't have coffee." how many different skus do you have? dan: online, we probably have close to 100 skus. but we launch 50 new skus each season. lemonis: and so what does it cost to create one new shoe? david: to launch a completely new sku with a new form, uh, i think it would be around $2,000. dan: he's just talking about making a sample, which is $2,000 for one shoe. so if you want to make a full size run -- 10 sizes -- you may need to pay somewhere around $16,000 to $20,000. lemonis: and so you guys have spent hundreds upon hundreds of thousands of dollars, through trial and error,
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building a certain amount of constructs, and it is taking you down a path that's spreading you so thin you're not executing your primary business. like, how did converse make a lot of money? dan: with one high top. lemonis: with one shoe that they sold that they knocked the cover off the ball. inkkas makes so many different models that it actually scares me. you compare it to a company like converse that made the chuck taylor, and they came up with a good model and they sold the heck out of it. inkkas, on the other hand, has dozens of different models, and then when you add fabrics and colors, it ends up being over 100 skus. this lack of focus could be fatal. how much money's in the bank account today...literally? dan: [ groans ] not a lot. not too much. about $1,000. lemonis: and how much money have you burned through since you started? dan: well, i mean, we're talking about investment -- -you're the c.e.o., right? -dan: i am the c.e.o. lemonis: how much money's come in to the company? dan: we're talking about a total of $500,000. and then on top of that, we have approximately $500,000 in debt. lemonis: and that's $1 million. so that's gone.
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dan: right. and there you can see our spread. lemonis: in 2013, it says you did $1.1 million. -dan: correct. -2014, you did $1.8 million. dan: correct. lemonis: 2015, you're projected to do $3 million. dan: those numbers are not going to be correct. lemonis: how much revenue are you gonna do for the year? dan: we are gonna do $1.5 million this year. lemonis: so you're gonna miss your revenue estimate. dan: we are going to miss our revenue estimate. -lemonis: by half. -dan: by half. correct. lemonis: do you feel like you're kind of on death's doorstep right now? dan: we are on very thin ice -- very, very thin. lemonis: no, but if you just cut through all the b.s... dan: we're in a tough spot. we're in a tough spot. there's no denying that. lemonis: three months from now, if you don't raise money, what happens? david: potentially go out of business. dan: we could potentially go out of business. i do have to say that we are just, like, fighters, and, like, we would fight till the day and to the -- lemonis: i get that. i'm down with you. i get it. dan: to the end -- end of the day, until they killed us, before we go out of business. dave: this is not gonna end this way, it's just not. lemonis: can you and i take a walk? -dan: absolutely. -lemonis: great. i want to take dan aside and have a bit of a gut-check conversation with him. he's the leader of this business.
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it's obvious that this company is his dream. he's taken his brother and his best friend down this path. and right now they're totally lost. it's got to be bothering him. why do you stick with this business, of all the things you could be doing? dan: this is me, you know. we want this so badly, and we've worked so hard. and it's just so frustrating to think that it could all be in vain. lemonis: you spend a lot of time thinking about that? dan: every day. it's hard to sleep. the only money i have left is in a house, and i know that that's the house they're gonna come after if this thing does go down and they need their money back. it's not gonna leave me or my brother much. lemonis: well, it seems like your brother's really committed to it. dan: my brother is a golden brother, you know. he's the best thing i have in this world. and without him, i could never have started this. lemonis: he's put a lot of money in here. dan: he's put a tremendous amount of money. he has a child. he has a wife. newly married.
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and i'm so proud of what we've been able to create, but on the other hand, i'm so sad that what we created could all go down the drain, you know? ♪ dave: marcus, good to see you. -lemonis: good to see you. -dan: good to see you. lemonis: what i wanted to do now is go over the financials. dave: this is, like, q1 through q3 of this year. everything's accurate till september 30, 2015. lemonis: okay. in 2014, you generated $1,800,000 in revenue. in 2015, you're going to be down almost... $320,000. dan: we went to a dozen trade shows in 2015, but the existing models did not have a good enough sell-through. lemonis: okay. so that's a product issue. -dan: right. -lemonis: so the total loss for the company, since the beginning of time to now, is how much? -dan: $606,000.
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lemonis: and how much capital did you say came into the business? dan: roughly $1 million. lemonis: okay. $1 million comes into the company. a loss of $600,000. that leaves you with $400,000. dan: mm-hmm. lemonis: so, do you have $400,000 in cash sitting somewhere? -dan: we do not. lemonis: do you have $400,000 of inventory sitting somewhere? -dan: we do not. -so where's the $400,000? dan: so, hold on. let me think of this. all i can say with 100% certainty is that not one of us has touched any... lemonis: no one thinks that. dan: okay. okay. i got worried. lemonis: that's not where i'm going with this. -dan: okay, yeah. -lemonis: where i'm going with this is you guys really don't know your numbers. dan: we could know our numbers better, yes. that is 100% true. -lemonis: well, you, specifically, as the c.e.o. of the business, should know the numbers like -- [snaps fingers] dan: that is true. lemonis: one of the main reasons these guys are out of cash is that dan basically spent every single penny launching new products and new styles and new fabrics. any sku that sort of popped in his head ended up getting made. in order for this company to survive, it's gonna have to have real laser focus. what is your equity alignment again?
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dan: mine is approximately 46%. -lemonis: okay. -dan: dave is approximately 27%. and, david malino, you're approximately 21%. -david: should be like 22%. -lemonis: are you getting paid? -dave: no. -lemonis: are you getting paid? are you getting paid? and how are you paying your bills? dave: you know, dipping into savings, basically. my wife was working. she's no longer working. she's on unpaid maternity leave. dan: you know, i have a credit-card bill. that's how i've been getting by lately. had to ask for some help from my mom and dad. it's been tough through some debt about that. i definitely [clears throat] -- [ voice breaking ] i always wanted to be a c.e.o. i thought it would be the best job in the world, and i still do, and when i know that my -- [clears throat] financial decisions negatively impacted the company, it was very, very difficult. you got be responsible for everything in the company. i failed in making good financial decisions at different points; numbers isn't my specialty. you know, there was failures in there. lemonis: i give you a lot of credit for being able to take responsibility for the decisions
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that were made and own it. i compliment the three of you being a team and kind of defending each other. that kind of makes me believe that if i did business with you guys, i don't feel like i'm gonna have to solve the problems by myself. -dave: absolutely. -dan: absolutely. lemonis: i like the product because i think that you're headed in the right direction. so i'm willing to make an offer. it's $750,000 for 51% of the business. dan: whoo! -dave: yes. -dan: wow! lemonis: you guys taking a $60,000 each salary. i want to resolve the debts that i think are gonna present a risk for the business going forward. would it be nice to pay off the merchant servicing loan for $250,000? dave: yes, it would. lemonis: would it be nice to have $200,000 in inventory? dan: yes. lemonis: would it be nice to have some money for product development? dan: oh, my god! it would be revolutionary. lemonis: and i would redo the equity so that you guys are all a third because the three of you all contribute equally
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to the company. dave: okay, so, i don't see any benefit. it's been three years of our lives. we have put everything on the line. it has strained countless relationships. for me to sit here and sign away control, it's just something that i have difficulty digesting. that's all. -david: you know, i think it's a low valuation considering the revenue that we can generate. lemonis: the amount of work that has to happen from here and the resources and the amount of time that has to be committed to this business isn't gonna be small. and based on the losses for the last two years, the $750,000 feels like a bit of a crapshoot because there are no assets for me to hold on to. dan: i would like to just, for one moment, say my point of view on this, okay? we need a grand maestro. i'm comfortable with a 51% deal specifically with this investor, and not with any other investor. -dave: i'm gonna say my opinion. -dan: okay. dave: i understand where you're coming from 100%. i feel like you're going to regret that yourself at some point, not because marcus does bad work, or he's -- whatever. -dan: i'm not gonna argue
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with you guys. -dave: okay. i just -- i know you well. we've been through this before. you will regret this decision. david: daniel, i told you this. there's too many lessons learned from your end after the fact. dan: it's hard to be, you know, on the spotlight like this. lemonis: dan, well, you're the c.e.o. and if you can't stand the heat, get out of the kitchen. oh. model year endink thclarence event. . looks right to me. shouldn't it be clear-
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dan: i'm not gonna argue with you guys.
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dave: that's honestly how i feel. i feel like sometimes you get a little excited about things, which is your strength, but sometimes also your weakness, and i feel like you will regret this decision. lemonis: i think at the end of the day, what you're really saying is you don't want me to have 51% of the equity. dave: i definitely don't, and that's nothing personal, but it's just -- lemonis: we should just cut to that chase. so i'll give you two scenarios. $750,000 for 51%, or $600,000 for 40%, but i get a guaranteed 10% return. that allows there to be 20%, 20%, and 20%. and be getting $60,000 a year in return -- it's actually a better deal for me. 51%, 40% -- it doesn't matter. i'm still 100% in charge. -dan: i'm comfortable with this. -david: yeah. -dan: comfortable? -dave: definitely. absolutely. dan: all right. thank you very much, mr. lemonis. it's a pleasure to have you on the team. -lemonis: marcus. -dave: thank you, marcus. ♪ lemonis: just so that you guys understand what's happening -- yesterday the guys and i made a deal for me to invest $600,000
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into the business to grow both short-term and long-term and really take it to the next level. when they took my check, i became 100% in charge, and you guys have to trust that process. as you guys know, i focus on three things -- people, product, and process. i am very comfortable that we have great people. from the product standpoint, i think the shoes are beautiful. it's not clear to me that there's actually a definitive process from ideas to being on the shelf, and i want to sort of road-map that. i'm really questioning, are we retailers, or are we wholesalers? dan: at the moment, we're -- you know, most of the revenue is being derived from the wholesale market. lemonis: okay. would you call yourself a successful retailer at this point? dan: i would call ourselves a very successful online retailer and a very unsuccessful brick-and-mortar retailer. lemonis: in order for this company to truly succeed over time, it has to have a very narrow focus -- fixing the product, focusing on your wholesale account,
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and growing your business online. the whole retail storefront thing, while it may be sexy and fun, is a loser. they're paying a rent. they're not generating any sales. and they have no idea what they're doing. also, you want to understand the right place for the company to actually be based because the primary buyer of the product, other than the online customer, isn't typically gonna drive to brooklyn. they're gonna go to the garment district in new york city. we're gonna work on comfort and we're gonna work on style. we want to work on those things so that we can grow the business. okay, we have a lot of work to do, okay? all right, guys, thank you. dan: thank you. thank you very much. ♪ -what's going on? -lemonis: hey, guys. dan: hey, how you doing, marcus? lemonis: how are you? today i'm bringing these guys to dna footwear, a popular retail chain in new york city. they're a big wholesale customer for inkkas.
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are you daniel? -daniel: daniel. -lemonis: i'm marcus. -daniel: marcus. pleasure. -lemonis: nice to meet you. -daniel: how are you? -lemonis: is this your store? daniel: this is my store, yeah. lemonis: supplying retailers like dna is a critical part of our business, but what's more important is to get feedback from the owner of the business and be good listeners and ask the right questions. what's the most popular seller of all of them? daniel: these did very well for us. that's the classic styles that are working. we call it the core of styles from them. lemonis: okay. what hasn't performed? daniel: this stuff. the seasonal stuff that they have -- you know, new products -- didn't take off like this one. lemonis: did you tell them that? daniel: i told them that. and that's why i said the classic should stay classic. and it's been working for us season after season. lemonis: staple, like the chuck taylor. daniel: exactly. this is great. you know, you could play around with the prints all day long. and if you want to create other styles, is it gonna be as successful as the classics, i don't think so. lemonis: okay. what i feel like you're reinforcing for us is we got to just get to our core, basic line, tighten it all down. -daniel: correct. -lemonis: okay.
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dan's giving us the same advice that i'm giving these guys -- stick to the basics. stick to the things that sell and stop trying to reinvent shoe wear. these basic shoes sell. they turn, they make money, they have margin. don't do anything more than that. we're gonna be coming back to you for some ideas. daniel: absolutely. lemonis: so, and you give free advice, right? do we have to buy a pair of shoes? thank you very much. daniel: thank you. pleasure. pleasure. ♪ lemonis: i wanted to start to think about how to pare down the line. and i really want to land on a more narrow selection of things. does this sell? yes or no? dave: that particular one does not. lemonis: okay, those are gonna go. does this sell? yes or no? dan: it doesn't sell as well as most of them. -lemonis: so this is gonna go. -dan: yes. -lemonis: does this sell? -dan: not that well, no. lemonis: no. what else do you got? is this staying or going? -dave: staying. lemonis: what kind of volume do you do on an annual basis? -dave: about 3,000. -lemonis: 3,000 pairs of these. great. what about this high-top?
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dave: 15,000. something like that. lemonis: when we examined all the sales data, we learned that five models made up almost 80% of the total pairs of shoes that they sold. the other 45 models made up basically none of their sales. all right, so we have five shoes -- high-top lace-up, low-top lace-up, slip-on, jogger, and camping boot. these will essentially be the framework of the business. and then inside of that, there's four different geographic influences -- north american, south american, european, and from africa. five molds, four geographic influences, and it doesn't go outside of that. going forward, inkkas' theme is going to be focused on simplicity. instead of having 50 models, we're gonna focus on 5 constructs that generate the bulk of our revenue -- high-top lace-up, low-top lace-up, slip-on, a jogger, and a camping boot. and each model will represent four geographic areas --
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north america, south america, europe, and africa. that's it. what is all this stuff? dan: so, this is some stuff that, as you know, i went down to guatemala... lemonis: and what trip were you on where this came up? dan: it was bolivia. [ laughs ] lemonis: and what happened with the pineapple hat? what trip was that on? dan: yeah, you know, that was a mexico trip. lemonis: and so do you think the company would save money if i took your passport away? dan: so, everything that you see here was said "yes" to by these two people, or else it wouldn't be here. david: 99% of the products here, daniel, you know, we agreed to. there were some that we said no, and then, you know, you pushed us. this is an example of something that we got bullied into. and we sit on 500 pairs of it. it hasn't sold. the sizing's off. the development was bad. and we had to go to multiple countries. this was disastrous. lemonis: where is the breakdown in the process that you're able to get it past the two of them? dave: it's tough to stand in the way. it's kind of like, you know, there's 10 new ideas that come out.
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one of them's great; the other nine are, like, terrible. just awful. like, just suicidal ideas. but he'll wear you down. lemonis: i start to challenge whether somebody can be a good leader if they're unwilling to let the people that follow them weigh in. that is the definition, in my mind, of a good c.e.o. but in the moment where the teammates say, "this is a bad idea," and you do it anyway, that does not necessarily embody, for me, what a good c.e.o. is. david: there's too many lessons learned from your end after the fact, and that's something that i've felt from the beginning -- "look, daniel, i told you this. i told you that," and you did it anyway. dan: i think it's -- for anybody, it's hard to be, you know, on the spotlight like this. lemonis: daniel, well, you're the c.e.o. when you put yourself in that role, you, by definition, are in the spotlight. and if you can't stand the heat, get out of the kitchen. if your business is in trouble and you need my help, log on to...
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lemonis: well, you're the c.e.o. when you put yourself in that role, you, by definition, are in the spotlight -- and if you can't stand the heat, get out of the kitchen. it's not the fact that you have an idea that's the problem. it's the methodology that you're using to judge whether that idea is good or bad. so with that, i want to be clear about something -- you guys are not retailers. you don't have the sort of disciplines for it and the infrastructure for it. and so this store is kind of a joke. whose idea was it to open this store? dave: it was dan's idea. at the beginning, i don't think we were onboard that much, but, you know... -lemonis: i really need to understand this, so i know how to stop it when i see it. dan: i can be very persuasive. lemonis: great. that means you can...your way through it. we are closing this store. we are getting out of this space. we are going to move this business to an office that i have in manhattan in the middle of the fashion district where we can have a little showroom. what this company has to realize is that today they're not retailers.
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they're manufacturers and wholesalers. and, yes, they have an online presence. most shoe companies start out that way. nike, toms -- they eventually get to retail, but not at the beginning. and that's where this company is -- the beginning. hats -- gone. bags -- gone. leather shoes -- gone. and it all needs to go. let's make sure that, effective today, everything that doesn't fall in the five-mold line gets blown out on the website, and we're clearing some cash. okay, guys. thank you. dave: thank you, marcus. appreciate it. ♪ lemonis: today i'm bringing the guys to modern vice, a shoe manufacturer in manhattan. they're a real expert in building great foundations for shoes. inkkas shoes aren't terrible. i just want them to be the best. how you doing? i'm marcus. jordan: jordan adoni. how are you? lemonis: jordan, nice to meet you. omar: how you doing? i'm omar bailey. lemonis: omar, nice to meet you. can you walk me through the process?
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-jordan: of course. -omar: yeah. lemonis: holy... this is awesome. i was blown away by it. it's literally a shoe factory in the middle of manhattan. omar: we do all the actual craftsmanship right here in this factory. lemonis: there's people designing shoes and cutting shoes and putting them together. this is a great resource. jordan: everything basically starts in this room. you know, we do all the sourcing out of here. we work directly off the last, which is what we're doing right there, which will help you with comfort, and also the design, the aesthetic of the shoe. it's really the right way to do it. lemonis: so, i wanted to bring in a couple of the shoes that are going to be the classic platform. the basic runner. if i could spend 10% more on improving the comfort and the structure of the shoe, i would do it. so, what do you feel like is missing from there? jordan: i'm not quite sure, like, what last they used to fit this bottom. i think the way that they engineered the bottom was they took two pieces. i don't know why, for mass production, they're doing it like this. is this a two-piece?
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david: yeah, it's three-piece. it's three components. jordan: i don't think it's the right last for this bottom. lemonis: what a last? [ laughter ] jordan: it's the mold. one of these. lemonis: this is essentially the cast? jordan: this will make or break the whole line of shoes. lemonis: a shoe last is a 3-d mold upon which a shoe is constructed. the last used affects the overall comfort of the shoe, with a focus towards the heel width, instep height, forefoot width, and toe-box depth. previously, inkkas used a stock shoe model from the factory without really taking into consideration the comfort. if we use modern vice's services and we get a last made specifically for our types of shoes, it'll fit much better. jordan: and the way that we do it is, you know, we really take into consideration, like, where these stitches are here, what kind of toe-box material they're using, like, what the backing is. david: i have no hesitation in doing a project, but you're driving up costs substantially. lemonis: on the product or on the development? -david: development. -lemonis: i'm good with that. -david: okay. -because what i'm essentially
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doing is i'm building the foundation of the house the right way. -david: 100%. 100%. lemonis: now when the walls go up, we're good. -david: yeah. -lemonis: modern vice is being paid to build the prototype shoe. once that prototype is made, then we'll be able to mass-produce it at a factory. but i want the original shoe to have the right comfort and the right style and the right details to it so that it's done right the first time. jordan: you're much better off doing it right than delivering shoes that fall off people's feet, that are gonna cause blisters all over their feet, 'cause you'll be out of business like this. ♪ lemonis: i brought you to one of the biggest fabric stores in new york city to come up with ideas. you keep telling me that inkkas is a worldwide brand. do you think maybe, just by chance, you want to cover america? dan: you know, i think that would be a great idea. lemonis: i love dan's use of patterns from other regions. they're colorful and they're bright. but i don't like the fact that he's left out his home market. it's kind of crazy to me. today i'm asking dan to pick out patterns and styles for north america.
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but more importantly, i want to see his process for myself. in the past, his creativity has gotten the company in trouble, and i'm not gonna let that happen again. ♪ charles, what's happening? charles: hey, what's going on, marcus? lemonis: good to see you again. how many reams of fabric are here? charles: i think half a million rolls, at least. -dan: geez. -lemonis: so you should be able to find something. -dan: something. lemonis: okay? dan went to town picking out every fabric in the store. i only asked him to pick out a few. it's no wonder that he's made shoes that have every pattern and every color variation. dan: so, these three are obviously from india. they obviously have a nice ethnic, indian vibe. lemonis: and so why did you pick these three? dan: we don't have anything currently from india. lemonis: were you outside with me? dan: was i...? yes. yes. lemonis: so, what am i missing? before we walked inside, it wasn't to do anything else, other than solve one problem.
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dan: the north american textile problem. lemonis: you didn't solve that with this. dan's all over the place. what he doesn't understand is the cost and the time associated with not following directions. and my confidence is very shaky. you're not staying on point here. i said pick one fabric from each region and make one pair of joggers. do you not remember any of that? dan: i do. i remember it like it was yesterday. lemonis: so why would you make 40?
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g on point here. it's the pride of authorship that i think ends up creating shoes that don't sell. it ends up making models that are just throwing darts at a wall. we don't have the luxury of throwing darts. i believe in you. let's be clear about that. so what i want to do is i'm gonna get out of your hair for a minute, and i want you to pick out five fabrics that represent north america. and we're gonna go over them tomorrow. all right? -dan: let's do it. let's do it. dan: all right, so... ♪ lemonis: let me see what you got. dan: okay, so, this is kind of a southwestern fabric, inspired by arizona, new mexico. this one is scottish tartan. you know, a very, very common design. lemonis: my task to dan was for him to pick five fabrics, and then we'll select one or two of them to make the prototype north american shoe.
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what's important about the task is that dan focuses and takes direction, which i expect the c.e.o. and creative director to do. dan: so, these, to me, felt very american, very bandana. this one is a more premium textile. this, to me, kind of is coachella. it's a little bit burning man. -lemonis: okay. dan: there was this one. this would be the east coast. this was a woman's winter-jacket fabric. these are actually printed textiles. this is kind of a chinese print. this one -- istanbul. lemonis: okay, 1, 2, 3, 4, 5, 6, 7... dan: okay. lemonis: ...8, 9, 10, 11, 12... dan: got one more in here, which is... lemonis: i asked you to pick five fabrics that were north american. that was the task. it was very clear. if you look objectively at this table and you say, "well, there's way more than five here, which means i spent more money than i was allocated to spend, which is the problem with the company,"
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and then i look at the actual execution of it -- you're not prudent with your time, and you're all over the place. now, don't get me wrong. dan's got a good knack for design, but part of this concept with him is him sort of doing what i ask him to do and sort of improving his listening skills. i don't know what his problem is, but he sort of never listens. going forward, there are going to be five forms. then there's gonna be four geographic territories that speak specifically to the fabrics that we choose -- north america, we're gonna do south america, europe, and africa. in the next task, i'm gonna make crystal clear to you i want four joggers. dan: four joggers. lemonis: one prototype for each area. i want these in my hand by next friday. dan: definitely. lemonis: and i don't want anything else. don't come back to me with any sort of other craziness. -dan: [ laughing ] okay. -lemonis: okay?
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-dan: got it. -we're going to hit a deadline. -dan: let's do it. -i'll see you back at the shop. dan: thanks a lot, marcus. ♪ lemonis: here in the middle of new york city, park avenue right here, madison there, all the fabrics and design areas right around here. dan: totally different energy. lemonis: so, are you ready to move in to your new home? -dan: absolutely. 100%. -dave: let's do it. lemonis: we finally got out of the lease and moved out of the retail space in brooklyn, and we've moved into a brand-new showroom in manhattan. these tables can become desks. dan: i'm liking it. liking it. i love it. this looks like a real showroom. lemonis: the benefit of inkkas operating in manhattan in the middle of the fashion district is that they're closer to the action, where buyers from around the world can come see your product. you need to be in the heart of things. they're not gonna drive out to brooklyn. dan: this is honestly, like, the dream that we set out upon when we arrived to new york three years ago to create a footwear company. it's perfect for us. lemonis: so, what i want to do is i want to have this ready
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by friday so when the new shoes show up on friday, i have some buyers coming, and they can come see all the different shoes. -dave: perfect. -lemonis: great. dan: one thing i did want to point out is that you said that the shoes would be ready on friday, but last time we spoke, we said that it would take at least 10 days. lemonis: no, no, no, no. when we were at the restaurant, i said, "pick these fabrics, and you got a week." you said yes. i even used the words "next friday." and so... dan: all the designs have been submitted. all the fabrics are at the factory, but it's going to take at least by monday to get those. -lemonis: why? -dan: i think you can have -- lemonis: i just need one pair of shoes from each region. there's four pairs. -just one pair in each region. okay. 'cause i'm preparing 40 right now. lemonis: that's not what i asked you to do. i said, "pick one fabric from each region and make one pair of joggers." do you not remember any of that? dan: i do. i remember it like it was yesterday. lemonis: so why would you make 40? i'm giving you all these assignments, and you keep failing at it. dan: so, here are the five inkkas forms
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i always like to not just get it done, but get it done, you know, really right. dave: he's trying to, like, impress you. he's trying to wow you. lemonis: but we can't keep making excuses that the intent was right. -dave: that's true. lemonis: you're gonna spend money on 36 pairs of shoes that i didn't ask for. i'm like, "what are you doing?" dan: now that you explain it like that, i understand that i just need to give you exactly what you want. i fully intend to bring the assignment delivered on time. lemonis: on time was friday. so let's just stop saying that. i would like this done by monday, okay? dan: i understand you. lemonis: this is dan's last chance to get this right. i have buyers coming here on monday, and we're gonna sell shoes. if he doesn't have everything ready, he's no longer gonna be the creative director. this space needs to also be completed by monday. -dan: excellent. -lemonis: so whatever sort of decor, arrangement, computers, whatever -- by monday. -dan: okay. -lemonis: does that work? dan: that works. thank you. thank you.
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lemonis: what's happening, guys? dave: hey! how you doing? -lemonis: how are you? -dave: good to see you. -lemonis: what's happening? -david: how you doing, my man? lemonis: i'm gonna be honest with you. you guys did a good job. dan: i'm very glad that you like it. really. it makes me really happy. lemonis: these guys have done a great job decorating their space. they have dedicated work areas to do their job. and they now have an actual professional showroom where real buyers can come and purchase their product. this showroom looks really good. totally different impression than going to the store. it just feels like a professional environment. dan: i would agree to that 100%. lemonis: let's look at the four shoes you came up with. dan: so, the task was to create one jogger per region. this one is america. the red bandana is the most classic of all the bandanas. this represents europe. we incorporated some nice caramel leather on it with a caramel rubber sole. this one is representative of patagonia, south america,
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and we tried to mix colors that would really bring out the beauty of the mountain range. so, this is inspired by the patterns of north africa -- tunisia, algeria, and morocco -- the maghreb region. and so there's really beautiful, intricate islamic architecture in these designs. and so this was the four set that we came up with for you. lemonis: i wish i could find something wrong with them. dan: hey! that's a first. that's a first. lemonis: that was a home run on your part. -dan: thanks, man. -lemonis: home run. dave: i also wanted to add that this new addition onto the shoe, which is the double needles, is something we added on. lemonis: i think this elevates the shoe from a perceived value big time. dan: the needles, for us, represents handmade, authentic textiles. lemonis: what was the incremental cost? dan: a few cents on the dollar, four cents. lemonis: look, dan did a nice job, and the finished product came out fantastic. i know it's been a bumpy road, but at the end of the day, he delivered on what i asked him to do.
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i think that what's on the table here is really a credit to all of you. and so daniel from dna is on his way here. -dan: okay. -lemonis: i want to see a strong presentation from you on five forms, four geographic regions, and how you're sort of focusing the company. dan: okay. lemonis: the number-one thing is give them an inventory reassurance. we will have inventory. we will have sizes. let's get ready for that, he'll be here in a few minutes. dan: let's do it. ♪ -daniel: hey! -dan: hey, hey! -daniel: what's going on? -dave: how you doing? good to see you. -dan: good to see you, buddy. here's the new showroom. daniel: nice. dan: so, here are the five inkkas forms that we're gonna be moving forward with. we have the camping boot, the high top, the low top, and the slip-on, and, of course, the jogger, which we added our new signature pin, the cross needles, on the back. lemonis: would you wear that? daniel: brown sneakers are tough. dan: we make each style from one of four regions --
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north america, south america, europe, and africa. and we tried to create something that embodied the leathers and the patterns of europe. lemonis: how do you feel about the four geographic areas? daniel: um... you know...
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daniel: um... you know... i think that's cool. i think it's cool. i like it. i mean, it's different. you know what i mean? i think that you -- first of all, the right thing you guys did is sticking with silhouettes that already work for you, and then just playing around with different materials. dan: yeah, the basics. we're building on the basics. daniel: yeah, and stay with it. lemonis: i was thrilled that daniel liked the new product lineup and the fact that it's simpler and cleaner. i think this bodes really well for our wholesale business going forward. now, all we have to do is sell him some shoes. dan: this feature is a really beautiful european textile that, you know -- me, it reminds me of chanel. daniel: i like this print. you know, i like this metallic. it's a dressy-casual. i love these prints. i think they look great. dan: yeah, and it's an american-style fabric. -daniel: i don't like this. -dan: it's too bright? -too much? -i don't like the suede colors. it's not red, not burgundy, not anything. i don't know what that is. -lemonis: you like this touch? it looks nice on the back of the shoe. daniel: yeah, i'm not against it. i think it makes it a little bit more premium. i think it's cool.
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lemonis: so we're gonna make that inventory commitment. we are gonna make sure that we're deep in the most popular sizes. daniel: cool. all right. i like it. lemonis: daniel ended up taking all five models in a few styles each. this meeting couldn't have gone any better. daniel, i appreciate you coming here. what i'd like to do is bring a lot of these shoes to your store and have sort of a nice open-house event, get people excited, get them in there buying shoes. -daniel: okay. -lemonis: 'cause i think our shoes will look even better in your beautiful space. daniel: yeah, let's see what their reaction -- you know what i mean? -lemonis: thank you, my man. appreciate it. i look forward to doing business. thank you. -dan: thank you so much. daniel: you got it, brother. ♪ lemonis: come on in to the inkkas trunk show. what do you think of these? -woman: i like the design. dan: that's patagonia. each one kind of has a story. -woman 2: nice idea. -dan: thank you. thank you. woman 3: i think these will be very popular. lemonis: what do you think of that? -woman 4: i like that. -man: these look so classic. that does look nice. daniel: we have some african models, south american, european models. -man 2: this is the african? -dan: correct. -woman 5: i see home. it hits home. -dan: are you from maghreb?
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woman 5: i'm from east africa. -i really like these ones. -lemonis: you do? and the color's fun, isn't it? woman 6: yeah, i like that a lot. dave: all right, yes, we got another taker over here. lemonis: we had a great reaction to our new product line. and we were able to gain a bunch of new customers. you guys should be very proud of what you've accomplished. you enter into a very competitive fashion business, and you guys muscled through it. going forward, we have one objective -- great designs, great comfort, great price, and... -dave: great profit. -dan: great profit. -lemonis: great profit. -dan: there it is. lemonis: all right, guys. i'm really proud of these guys, and dan is learning to focus his efforts. he's working really well with his brother and david. and we've already sold more shoes tonight than we did a whole week in our brooklyn store. now i feel like these guys are really ready to hit the ground running. dave: all right. [ cheers and applause ] dan: nice distance!
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