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tv   The Profit  CNBC  September 20, 2016 7:00pm-8:01pm EDT

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trevor:: we're flex watches.fit"... we make watches that give back. lemonis: at an l.a. watch business with a powerful mission... travis: each color represented a different charity. lemonis: ...the owners have lost their way, and now they're losing time. how much longer could you keep the business open? travis: another few months. [ sighs ] lemonis: their branding is unfocused. this is a total mess. there's no signage. there's no point-of-purchase material. there's nothing. their process is rushed. feels like a high-school art project. and a painful tragedy has them questioning their purpose. travis: you're allowed to talk about the fact that we did charity and -- trevor: that is not our direction. travis: let's be honest. trevor: stop cutting me off. travis: this is who we are! lemonis: if i can't help these guys return to their roots... so you did $1 million with the watches,
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and then you're like, "that's too much." brad: if it's not broke, don't fix it. lemonis: ...this business will stop ticking for good. travis: walk away, then. lemonis: 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. ...is "the profit." ♪ in 2010, lifelong friends trevor jones and travis lubinsky founded flex -- a watch company with a cause. trevor: we make watches that give back. every purchase helps provide meals for children in need. lemonis: with their positive message, a reasonable price point, and bright, fun colors, the company stood out in a crowded field.
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travis: the watches are actually all gonna be interchangeable. it's also a great upsale opportunity. lemonis: and soon, sales were approaching the million dollar mark. travis: the components will be here in two weeks. there's half a million dollars of these watches sitting around. lemonis: but when flex started introducing new styles, customers stopped buying. travis: what orders do you need to fill? brad: i mean, no one's committed yet. travis: this is ridiculous, bro. lemonis: now their revenue is in free fall, and their once healthy profits have turned into mounting losses. i have been looking for an accessories business to pair with my fashion brands, and flex's social mission just increases its appeal. if i can get these guys back on track, we should be making money and a difference in no time. hi, guys. brad: hey, how's it going? lemonis: i'm marcus. brad: brad. nice to meet you. trevor: trevor. lemonis: trevor, nice to meet you. travis: i'm travis. lemonis: how are you? what are you guys doing? brad: just going over inventory. lemonis: is this the whole office? travis: you're looking at it. and then the warehouse is downtown. lemonis: okay. are those the watches?
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travis: yeah. so, we, basically, started with an interchangeable watch. so the face pops out of the band -- pull back, pop up. lemonis: it's a cool watch. what does a watch like that sell for? travis: $35. lemonis: these are nice looking watches at a great price point. travis: we wanted to do an accessory that was bright, that could match with all all different things -- hats, shoes. lemonis: this is a comfortable watch. travis: it's lightweight. it's durable. initially we had 10 colors. each color represented a different charity, that we partnered with to give back 10%. lemonis: that's pretty slick. travis: yeah, right? trevor: we wanted to do something different, and no one was doing charity in the the watch space. so, we started partnering with charities, and people loved it. lemonis: are these still made today? travis: no, that's the first generation, five years ago. lemonis: so that's first generation. what happened after that? where's generation two? travis: so, we made a sport version at $119. lemonis: i look for watches that aren't expensive. i don't like expensive watches. why did you change your model? travis: well, we wanted to fit in with retail stores, and they said, "you need to be about $100."
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so, that watch for the retailer, buying it at $15 and selling it for $35, they just weren't getting the right ticket per door. trevor: they told us to make a higher price point watch. it wasn't gonna make it into the case. lemonis: at $35? trevor: no. lemonis: so, you changed your whole business model over retailers asking you for a higher price point. travis: yeah. lemonis: so, this is generation two. is there a generation three? travis: you see right here? we're trying to profile it now. so that's gen three. lemonis: what does this retail for? travis: this, specifically, had to go backwards now, to go $65 to fit in between. lemonis: and so you just dropped the price, thinking you were finding a hole in the market. travis: yeah. lemonis: where's the charity angle on this generation? brad: a lot of people don't realize we still do the charity aspect. lemonis: i think this is a total mess. it doesn't feel on-point with the brand. if you guys have a mission, you should stick to your mission. this is what happens to a brand when they try to appeal to retailers. their first generation watch had great colors,
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had great story, had a charity aspect, and then they, all of a sudden, changed directions. and then they wonder why it stopped working. who's in charge of the three of you? trevor: travis and i own flex together. travis: and my brother came down and he was, like, the shipping manager. lemonis: oh, you guys are brothers? brad: yeah. lemonis: what do you do now for the company? brad: i'm the general manager. travis: we each own 41%. lemonis: okay. so 82% between the two of you. and then there's somebody else that owns 18%? travis: oh, we have an investor. lemonis: what are your guys' individual roles? trevor: so, i'm the creative. everything that you see flex, whether it's a video... lemonis: so trevor has marketing. travis: yeah, and trevor -- sorry, just to jump in -- trevor's visual. i source all the components. kind of work with the factory to figure out what can i get the quickest at the most affordable price. lemonis: do you literally do it like that? travis: yeah, literally. lemonis: travis says he does everything fast and on the cheap. yeah, that's obvious. it shows. how much revenue does the business do? travis: $500,000 after we launched. lemonis: that's strong. travis: yeah. $979,000 the next year. lemonis: getting stronger. travis: and then we changed the product. our sales dropped to half a million.
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lemonis: because of generation two, sales went down. travis: yeah, they dropped 50%. lemonis: so, how much business did you do last year? travis: $300,000. lemonis: and what did you end up making? travis: we lost $70,000. lemonis: now, who funded the loss? travis: we all did. just personal stuff. lemonis: so on your personal cards? travis: yeah. i mean, right now, it's $70,000 we're in debt. lemonis: i'm a big believer that numbers don't lie. the further they got away from their original story and the charity aspect and started making watches that weren't fun -- look like a watch you could buy on a street corner -- the worse their numbers got. what gave you guys this idea to get in the watch business? travis: so, his mom ran a breakfast program in mexico. lemonis: okay, a food program. trevor: yes. we would go down there and volunteer, and so we wanted to make an impact with something that we really felt was cool and affordable. lemonis: is your mom still doing the breakfast program? trevor: um...she was until she -- she got breast cancer eight years ago. we lost her three years ago. lemonis: she passed away. trevor: yeah. lemonis: what was your mom's name?
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trevor: karen. lemonis: is your mom's name incorporated in stuff? trevor: no, we've actually talked about that, but we're just not able to go there yet. lemonis: how do you keep her momentum alive? what do you guys do to do that? trevor: nothing. we started as a purpose brand, but i think we'd be more of surf-beachy brand. it just didn't feel right pushing a story of "this watch will provide meals for children in need." we wanted to make sure that people knew that it was still a cool watch and not just a donation piece. lemonis: the story that trevor's telling me has confused the heck out of me because in one sentence he's telling me that it was about his mom and the charities, and the next minute, he's telling me about surfing brands and cool things. so, i wanted to get the actual story from him. i think the fact that you have that as your purpose is a very big deal. you're driven to have this succeed because that's your connection to her. trevor: i don't think about that. i just -- i think i've pushed it out. losing her is just -- i haven't, like, dealt with it, you know? i'm just bitter. but yeah, we keep moving, for sure,
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[ voice breaking ] 'cause she would love that. lemonis: i lost my mom, you know, not too long ago. trevor: i didn't know that. lemonis: yeah. you know, i appreciate your vulnerability. i mean, talking about your mom, i think that's always tough. but you gotta deal with it, you know that, right? trevor: i do. lemonis: and the way to do that is to have this business fulfill what she wanted you to do with it. i-i feel bad for him. look, i get the fact that trevor's struggling with this whole thing, because, in his mind, the charity aspect connected to the watches is a direct connection to his mom, and it's tough for him. but it's had a direct impact on business, and trevor needs to deal with this because it hasn't been good for him either. all right. let's head to the warehouse. trevor: all righty. ♪ travis: hey, guys! man: hey! lemonis: how are you. i'm marcus. nice to meet you. so, how did you connect with them? travis: our office used to be two blocks away. lemonis: okay. travis: we came across this building, walked in, and said, "hey, how's it going?" within five minutes, we were creating a new watch. lemonis: what i just heard seemed like speed dating for business.
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"i'm gonna meet you in five minutes, we're gonna do a deal together." maybe a little due diligence, maybe a little shopping, maybe a little research. not for travis. as they developed new products, they would come sit down with you, show you a sketch. i would wanna see that whole process. naim: yeah, let's do a tour. so, this is a family-run business. we've been doing this for about 15 years. all of their product is just here. i ship it out for them. lemonis: who came up with the box design? naim: well, we actually were in a rush and we s-- lemonis: it looks like that. this box takes the value way down. when this is at point of purchase, the packaging is gonna be more important to me than the watch itself because this is a commodity business. and so you have to find ways to differentiate yourself. this is one of them. is there anything patented about the product? travis: no. lemonis: nothing proprietary. anybody could knock it off. travis: and to get a design patent is like, takes years. so, i'll show you the process of building a watch. we pick a shape. step two is the band. what kind of band does it go with this casing?
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colors wouldn't matter. nothing would matter. then we'll pick the movement. lemonis: this feels a little on the fly. i have a new job for travis. he should be the spokesperson for minute rice. you know why? it doesn't take a lot of thought or preparation. with him and the watches, he doesn't think about getting a patent, he's not worrying about the packaging, he's not putting any thought into the design. i mean, in the past, they had a brand, but now...there's nothing here. i mean, honestly, if you had not told me the story about why you guys created it and how you got inspired, i would have been like, i don't need you guys. you have to bring that stuff to life. how do you take social media? what are you doing today that accomplishes that? trevor: we're doing everything you could imagine with video and posting and stuff. lemonis: so, here's your instagram page for flex watches. so that's a picture of a surfer. i don't know the co-- why there's a connection. trevor: uh, we're in l.a. we're in, like, the heart of l.a., so it was kind of appropriate for the watch. lemonis: you are, people buy stuff all over the country. to me, the best branding is the authenticity branding.
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what is your real story? why do you guys care about it so much? why do you want other people to care about it? all the charities that you're involved with -- you should have things posting their events. trevor: there's an image that we try to uphold. travis: but there's no pulse. there's no, like, real story. you've held back, and i feel like it's not only a part of our story but a part of your life. like, you're allowed to talk about the fact that we did charity and your mom was involved and talk more about the breakfast program. brad: i feel like we did that a lot more when we first started, when it was all the charities. lemonis: when you did a million dollars a year. you have, really, two interesting dynamics happening right now. you have trevor who wants to get as far away from the original brand story as he can, and travis who wants to do things as fast as he can, and when you combine those two things together, you end up with a company that makes gold watches in [bleep] boxes. i feel like i have a decent idea of the process, or lack thereof. i'd like to go somewhere else and sit down and look at the financials and start to dig in. ♪
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guys. travis: hey, marcus. lemonis: how are you? travis: how you doing? trevor: good to see you. lemonis: what i thought we could do is just really get a sense of what the revenues look like and what's happened each year. so, 2011 you did $500,000 worth of business. gross profit of $129,000. 2012 -- $979,000 of revenue, which is a good job, by the way. 2013 -- the sales go to $436,000. they drop in half. you lost $200,000. travis: that would be the year we started, basically, redoing the brand. 2014 -- $311,000, lost $87,000. 2015 -- $279,000, lost $34,000. on the balance sheet, the total liabilities are $71,987. does that include the credit cards that you guys told me about? trevor: yeah. lemonis: and you didn't take any significant pay. what's at stake for you guys in this business?
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travis: [ sighs ] the last 5, 6 years of my life and my future, so everything. brad: i moved home with my parents and my wife. trevor: the three of us have given blood, sweat, and tears into this business, and we all believe in it so much. brad: it broke my heart 'cause the whole charity aspect and giving back was what drove me to work so hard for the company. lemonis: and not take a pay. brad: yeah. lemonis: and move back with your wife to your parents' house. that's a big sacrifice. brad: trevor went through a hard time, obviously, after his mom passed. trevor: because of me, probably, we just haven't talked about it and discussed it as much as we should, and i don't know how to tell that story. it's tough. travis: [ voice breaking ] i feel bad. i feel bad for my best friend. that's it. i mean, no one deserves to, like, go through all that stuff. just, it hurts, you know? lemonis: yeah, but you're emotional because you believe in what you're doing. what's the business worth today, in your mind? trevor: we like to think that it's close
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to about $2 million evaluation. lemonis: business that did $279,000 last year and lost $34,000. my offer, after considering paying off the liabilities, putting $100,000 of inventory, putting $100,000 of working capital in the bank so that rent and salaries and things can get paid and then dedicating $100,000 specifically towards mass marketing to the world, would total about $400,000. so my offer is $400,000 for 40% of the business. travis: a million dollar value. lemonis: that's what it is. travis: um, so, obviously, we have to discuss this. where we're at, we have to dilute each 20%. travis: should we include something about your mom and the meal program? trevor: this is not the imagery that fits our watches, the style.
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travis: i'm telling you the past and who we are. trevor: that doesn't have to be the brand! why does the imagery have to be that?! travis: this is who we are!
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i'm just a guy who wan ♪ travis: we have to dilute each 20%. so me and you are dropping to 21% right there, and i'm pretty confident the company's worth $2 million. trevor: well, as much as we want to believe that it's so much more, the numbers don't tell that story. i mean, it's not about that.
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we need marcus as a partner. travis: so, i think we're gonna take your deal. lemonis: before i write this check, there is no question that i'm 100% in charge. we have a deal? trevor: well, we appreciate it, marcus. thank you so much. lemonis: congratulations, guys. get your ass to work. ♪ what's happening, guys? trevor: hey, marcus! lemonis: one of the things that i thought we could talk about is what the plan and the process are gonna be. we're gonna rebuild a brand using social media, using packaging, using product development. my biggest concern is, i don't know what your story is today. we probably need to go back and make a brand-new generation-one watch. and it needs to be something different and proprietary that nobody else can get to. we're no longer gonna downplay the fact that this company has a mission. in fact, we're gonna amp it up. we're gonna get back to the 10 colors and the 10 charities,
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and then we're gonna add some things that make it even more unique. all right. let's go to work, guys. trevor: beautiful. ♪ karlo: hello, guys. welcome to shiekh. lemonis: how are you?! karlo: how you doing? lemonis: i'm marcus. karlo: my name is karlo. nice to meet you, marcus. lemonis: are you the manager here? karlo: yes, sir. i'm the store manager. lemonis: one of the things that the guys need to think about as we relaunch the brand is how their product's gonna sit inside of the retail space, how the customers are gonna react to it. how it's gonna be merchandised, how the sales associates are gonna think about it. so i'm taking them to shiekh shoes -- a store that already carries their product. and i want to see what they're doing now and what we need to do better. how has flex watches done with your store? karlo: they did very well. good price point. we had the other, different design that wasn't these. it was a different rubber-style watch. lemonis: generation one. and do you still carry those today? karlo: that style, no. lemonis: what happened to the old style? travis: there's a corporate office, and they requested that we had a more expensive price point 'cause it was not worth his time to sell the watch.
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lemonis: so, you did a million dollars worth of watches and then, all of a sudden, you're like, "that's too much." travis: essentially. lemonis: brad, were you consulted in that process? brad: yeah, i was. it it's not broke, don't fix it. lemonis: a store like shiekh has a very small staff -- two to three people -- and it's not realistic that they're gonna be able to spend a lot of time selling a $35 watch. they asked for a more expensive watch. travis just jumped right to it. rather than just making a more expensive watch, what i'd rather do is invest the time and money into a more creative, thoughtful way of merchandising the product or selling it and giving the store a crutch or a way to make the sale easier for them. what do you think this company -- the corporate office -- would say if there was a display that was built on our dime just for them that was really beautiful and it told the story? trevor: i think they'd be on board. lemonis: do you know what a silent salesperson is? trevor: something that sells itself for you. lemonis: sells itself. and so if we had something built, probably cost $300, what's the wholesale order
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that would go into that first slot? travis: $1,000. lemonis: what's your margin on it? travis: about $500. lemonis: okay. $300 investment, $500 in gross margin, $200 in profit. if we provide retailers with a simple, affordable, silent salesman display, it makes it easier for everybody. they don't have to invest the valuable time that it takes telling the initial story. the silent salesman display will cost flex about $300 to provide to the retailer, but it will be able to carry about $1,000 worth of inventory, with a 50% margin. so while we'll only net $200 with the first order -- $500 worth of gross profit less than $300 from the silent salesman -- every order after that will yield the full $500 in gross profit. what we're gonna do is, we're going to design a free-standing trade display, but not yet. first step -- who we are. i want to task you guys with coming up with a vision board that incorporates everything that you think you are,
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and you got to work together as a team to do that. see you guys soon. brad: thank you, marcus. trevor: thanks, marcus. ♪ travis: so, how do you want to start this, trev? trevor: i thought this would be good. this is newport. this is where i learned to surf, this is where i grew up going to the beach. travis: obviously san diego, since we started in san diego. brad: i feel like there's a lot of beach. our whole brand isn't beach. like, you're not gonna wear this to the beach. trevor: let's move on to these. travis: i think something like this shows having fun. i mean, personally, i skate, so i feel strongly about this. trevor: so, here's my thing with skating. obviously we don't make skateboards. i don't like the street side of it. i don't like the grungy skate-wear, asphalt, the colors. it just feels like it doesn't fit. travis: should we include something about your mom and the meal program? as much as skating and artwork is part of it, so is charity. trevor: i don't want to use it. travis: it fits into our brand.
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trevor: i think we're way more of a surf vibe. travis: so would you -- i'm kind of lost. brad: question, trevor. you're gonna want this? travis: hold on. don't cut me off. i'm in the middle of trying to -- brad: well, i'm trying to back you up here. travis: all right, let me make my point real quick. i'm telling us who we are. trevor: this is not the imagery that fits our watches, the style. that not our direction. travis: let's be honest. trevor: that doesn't have to be the brand! travis: this is who we are! lemonis: if your business is in trouble and you need my help, log on to...
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trevor: that iswe inotude somethour direction. mom? travis: let's be honest. trevor: stop cutting me off! i literally don't understand how we're still talking about this. i -- this just isn't us. travis: it is. it's part of who we are! trevor: that doesn't have to be the brand! travis: this is who we are! walk away, then. [ sighs ] i'm literally over this. like, i can't do this. ♪ lemonis: hey, guys. travis: hey!
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trevor: marcus, how you doing? lemonis: i've engaged a renowned branding agency based in los angeles called oishii. they're experts at really giving people good feedback and helping them develop their brand. and i wanted to get their unbiased opinion about what they thought about the board the boys put together. travis: hey, guys! trevor: hey, great! brad: brad. travis: travis. kate: hi, travis. i'm kate. lemonis: if i can just get these guys to actually tell their story, the chances of selling that watch are increased dramatically. i tasked them with putting together a simple board that told their story, create a silent salesman that said exactly what you do and why you do it. travis: all right. kate: "express yourself." "get creative." "flexible." ismael: how about this? "flex isn't just a fashion statement, it's a lifestyle." kate: i mean, obviously this is a very... california-inspired mood board. ismael: it feels like a travel agency. you know? like, you're enticing me to go to california. lemonis: there was a story. it just wasn't the story that i was gonna invest in. it felt like venice beach meets, i don't know, "hawaii five-0."
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did you know it was a watch company? kate: no. trevor: we were trying to make it cool in some way. i think a lot of middle america buy that california lifestyle. lemonis: so you're a california-lifestyle brand now? trevor: well, we grew up here, and so all of us -- lemonis: i grew up in miami, but i don't put pictures of miami everywhere. trevor: unless you really liked miami. lemonis: i do like it, but if i'm selling rvs, i don't put pictures of south beach. kate: the market is very crowded with people wanting to tell the california story. sometimes it can come across as very disingenuous. trevor: this is like home to me. i feel like this is part of who we are. lemonis: i saw you shake your head. brad: i'm just bummed. lemonis: what are you bummed about? brad: our story doesn't come across. ismael: a lot of brands try to infuse lifestyle. part of the problem of that is that it becomes a cacophony of lifestyle images. at the end of the day, it's like, who cares? kate: tell me more about why you're doing this.
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travis: we started with 10 colors, 10 charities, and we donated 10%. so it was 10 colors, 10 charities. ismael: i love that. lemonis: was their story apparent from that board? ismael: not at all. kate: not at all. ismael: you guys have to understand that creating a brand with a cause goes above and beyond the product that you sell. what i'm buying is you guys, is the story, is the belief, is the conviction, is the passion. 9 out of 10 companies that come through our doors have no vision, have no passion, have none of that. you guys have it, but you missed it completely. kate: now that we have that, i can actually see why you're doing what you're doing, and i'm definitely more in love with what it is. lemonis: thank you very much. thank you. kate: thank you. lemonis: the fact that you didn't make your mom the showcase of it all, i can't understand it. we've talked about it. what is it that didn't make it the big front-and-center thing? trevor: i really feel like too much of that -- i-i-i don't --
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for this board, i'm not gonna put pictures of me and my mom on there. this is not who i want flex to be. lemonis: it's obvious to me that trevor continues to run from the original purpose of this brand, but without this story and without the purpose, there is no brand. what's going through your mind right now? trevor: i don't know if the face of the brand is supposed to be so much about me and my mom. as much as that's our story, like, i just struggle with talking about it. lemonis: why? trevor: i don't know. i don't want to mess it up. you know? lemonis: for who? trevor: for her. she's -- she's a big part of flex. she was our team mom, and she helped us get off the ground. i mean, we had nothing, and even just some connections with the breakfast program
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and connecting us to charities. lemonis: so, that feeling that you have that makes you feel like you're connected to her again is what has to come out. so here's what we're gonna do. one of those 10 watches is gonna be solely dedicated to your story and your mom's story. and you can celebrate her life, and people could wear it, and people could be excited about it, but you got to tell it with everything you have. you can't leave anything on the table. trevor: i really appreciate you understanding. i mean, 'cause it is tough to build that in, and this would be really special. lemonis: what would the cause be that the sales would benefit? trevor: i mean, the obvious move is to fight cancer. lemonis: 'cause i think once you could tell that story and get it out, it's gonna free you up to do everything else. ♪ we're finally ready for production, but, candidly, these guys still lack in their process, and i'm not gonna just let them run loose. we're gonna start with something much easier first.
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trevor: we could change the pattern on this to match what's on the watch. lemonis: i've arranged a meeting with tinsel -- a worldwide packaging-design company to come up with a special box that will separate us from everybody else. trevor: when you open this, there'd be something else right here, cut out, and this would be a different color. lemonis: also, i've asked travis to come up with a new display case and make a list of various manufacturers. travis: i need to make a display as fast as possible. naim: it's like 20, 30 days. it's conceptualizing and drawing and then this and this and that. travis: i don't care. we have to rush it. i just need to throw artwork together, dude. can you help me throw some artwork together? naim: yeah, let's go. ♪ lemonis: hey, guys. the guys invited me to come down to their office to look at some boxes that were prototypes for the watches. they tell me that they want to show me the new display case. new display case? i never even saw a design. travis: this is gonna be the first box. lemonis: box is cool. these the towers? travis: yeah. this is more of your free-standing store.
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lemonis: i'm gonna pull this out, if that's okay. travis: yeah, yeah. totally. lemonis: does it have wheels? travis: no. lemonis: why is the back so plain? this thing looks like rushed and unfinished. i couldn't be more disappointed with the display case that i'm seeing. this silent salesman has to be able to sell the product on its own, but the one that i'm looking at right now isn't selling me anything. this was travis' responsibility, and yet again, he looks like he's rushed through it. when you make a free-standing display for a store, they want to move it around. it has be seen from all sides. where's the story? this to me, feels like a high-school art project. brad: i don't think skulls and darkness -- i-i'm not a fan of. trevor: i like that it's different. i think the skull thing is kind of fun. travis: you lost your mom to breast cancer, so i don't think we want to push skulls. trevor: i think that's irrelevant.
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lemonis: the base feels plain, there's no casters, the back is plain, the top is plain. what charity is this one? travis: it doesn't represent a charity at all. lemonis: why not? travis: the watch will but... lemonis: but why wouldn't the box speak to the color? 10 colors, 10 charities. where's the story? when i first met you, travis, you rushed things, just to get something moving, moving, moving. so i need you to just take a minute, slow the [bleep] down, and say to yourself, "as a consumer, do i know what the message is if i just walk by it quick?"
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part of the reason that i'm so frustrated about the lack of quality with the silent-salesman display is that i've set up a pitch with flip flop shop. they have over 200 stores across the world. i'm not taking them this. this is a big account. you gotta fix that case. you guys have to come up with something better. ♪ trevor: wow! russell. russell: how you guys doing? lemonis: the silent salesman is an important marketing tool, but it's not the most important one. that would be the website. so i've set up a meeting with my friend russell brunson, one of the world's top experts in internet marketing. he's gonna give the team some feedback, and he's gonna help us go to the next level. russell: i was looking around flexwatches.com. looking around, there's all these options -- kind of got bored. lemonis: was the charity thing obvious to you when you first went on the site? russell: not at all. travis: like, the story wasn't clear. russell: i own a company called click funnels, so any entrepreneur can build a sales funnel. lemonis: at its most basic,
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an online sales funnel is a series of pages that leads consumers to the check-out. introducing the product, telling the story, getting them invested in it, finally taking them to the sales page and even upselling them additional products. it's a great way to convert visitors into customers because you're giving them step-by-step guidance. did you put any ideas together on paper for them to see? russell: i did. the first thing i want to show you -- for redesign for the homepage, we did this right here. so we'll have something that shows right here, and then there's a video of you guys telling your story, and then you tell them, "look down below and find the cause that matches what you care about the most." they come down here and they say, "i'm interested in breast cancer," and i can see what's happening. i can see how much money's been raised so far. they can click on it, then it takes them to their first funnel. travis: this is sick. i'm floored. i'm literally floored. lemonis: okay, let's get some more boards. russell: if somebody was to click on breast cancer, for example. so what's the process, now, we take that person through?
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here we would have a very emotional video of somebody telling their story about the cause. we have whatever the watch offer is, person's story here. we can connect with them here, then we got them as a customer for life. travis: that, honestly, is beautiful. brad: you get hit with the cause, not the product right away. trevor: exactly. lemonis: any other boards? russell: yep. so, now they've purchased the watch. they need more watchbands. 'cause if i got the yellow one, i would want the black and the blue and the purple and the -- i would want the whole kit. so make a very special one-time offer where they can get a big discount on all six watches. all they have to do is click "yes" on this button. trevor: it all just looks so good. lemonis: any final direction for them? russell: the biggest core thing we need is a really good emotional-connection video from you guys telling your story and, then we need a really good video for each charity. lemonis: anybody can sell a watch, and i want to know why you want me to buy it. create that connection with somebody. i really want you to work on that. so, the goal is, in the next couple weeks, get the site up, get the videos made. this exercise that trevor has to get done of making these videos will determine
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whether he's qualified to be the marketing person or not. because if he can't tell the story, including his own story, this sales funnel won't matter. it's put-up or shut-up time. ♪ the pitch meeting with flip flop shop is coming up fast, so we need to get our nose to the grindstone. trevor: let's do this. lemonis: trevor's focusing on content for the new website. meanwhile, travis is taking the lead on production of the new watches. travis: water-proof the heck out of it. naim: that's time, and we have to go back to the drawing board for that. lemonis: and he better put more thought into this than he did the display cases. travis: let's make it thinner. let's make it smaller. naim: sure. lemonis: and those new features i wanted to add to the watches to make them more unique, well, the time is now. so i've arranged a sit-down with my friends from printed village. ♪ come on in! trevor: hey, marcus. lemonis: how are you guys? trevor: good to see you. jason: hey, guys. nice to meet you. trevor: trevor. travis: travis. brad: brad. lemonis: printed village connects artists from around the world with companies looking for unique designs for their products. the artists earn a royalty,
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the company gets some great designs, and everybody wins. it's a business with purpose, and it makes it a great fit for our company. take a minute, the three of you, and i want you to pick out designs that we're gonna launch. travis: okay. lemonis: okay? guys, there's all these, as well. stay on story. you were selling these watches for $35 retail price, and they were costing you...? travis: $5. lemonis: $5. and so if they end up costing you $10 or $11, i think that the perceived value difference between plain one and this, it's got to be $15 or $20. flex's watches used to cost them $5 to make, and they would sell them for $35. licensing printed village designs will cost as additional $5, bringing the total to $10. but it will also boost the perceived value of the watch, allowing us to raise the price of the watch by as much as $20. so that $5 investment will end up yielding the company an additional $15 in gross profit. trevor: all right. like this. i like that it's different. i think the skull thing is kind of fun.
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brad: i don't think skulls and the edginess and the darkness -- i-i'm not a fan of it. just don't like the skulls. travis: it's a "no" for me. brad: no. trevor: i still like it. brad: how does that have to do anything with who we are? trevor: well, people love halloween, though. i could argue that this is a fun thing to launch in october. travis: in october. you lost your mom to breast cancer, so i don't think we want to push skulls. trevor: i think that's irrelevant. travis: i don't know that that's irrelevant. i think that's pretty relevant. lemonis: how is that on-story for the company? trevor: it's a -- it's a design. it's patterns, right? lemonis: but how is it on-story for the company? trevor: i don't think every design has to be on-story. travis: each watch represents a different charity that we've partnered with to give back 10%. brian: my biggest concern is the watch category. "watches" is a tough one. we're flip flop shops, we don't carry watches at all.
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i'm raph. my name is anne. i'm one of the real live attorneys you can talk to through legalzoom. don't let unanswered legal questions hold you up, because we're here, we're here, and we've got your back. legalzoom. legal help is here. un. legal help is here. brad: i think that's the complete opposite for what we want to be pushing. trevor: it's a cool design. i like that. lemonis: we went to the creative agency. what did they tell you? brad: we were trying to be cool. lemonis: and what did they tell you would happen when you started to market it? travis: you get swallowed up by everyone else. lemonis: we cannot depart from story. find out what the story is and have a business with purpose. all right? next. brad: this one, i think, is the most fun. trevor: i don't care for those colors. there's a lot going on. travis: i personally like the other geometric shapes that you chose over the bright colors. brad: i prefer that one, as well. travis: when we do the meal program,
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there's, like, arts and crafts in mexico, so all these kids get around and make fun stuff. lemonis: that's a great story. you've seen the path that i'm looking for you to go down. i'm looking for you to come up with a cause, and then we're gonna submit it to printed village. so, i want to do the one about your mom. okay? travis: absolutely. lemonis: okay. thank you, buddy. appreciate it. ♪ when we met with russell, we talked about a video. any progress been made on the video? trevor: yeah, we have a couple things, actually. lemonis: can i see it? trevor: yeah. lemonis: nervous and excited at the same time. while this video is going to give me the indication of whether trevor's qualified to be the marketing guy, more importantly it's gonna tell me if he's really ready to tell his story. man: ♪ there she is karen: hi. trevor: in 2012, my mom, karen kagan-jones, passed away from breast cancer. [ soft piano plays ] ♪ this ain't betty ♪ man: what did she do? doesn't she lay there and read her magazine?
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young trevor: no, she slobbers. man: ohh. karen: love my kids. ♪ this ain't just lizzie ♪ man: hold it up. trevor: her greatest mission was to help others. lemonis: not only does the video tell the story, and not only will it resonate with people, but trevor really has come to grips with the reality of why they started the business. he's able to not shy away from it. look, i still think trevor is still getting used to the brand direction, and we saw that a little bit at printed village, but on an emotional level, he's made a ton of progress, and that's good for business. that's really nice. trevor: thank you. travis: he produced the song. lemonis: you wrote that? trevor: i wrote it. i played guitar, sang. it makes me feel so good. i-i-it's crazy, we feel so inspired again to -- to share with people about these causes that we care about. lemonis: the reality of it is that the reason your business was good is 'cause people like the story.
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you had to fall in love with the story again yourself. brad: this is why i was so gung-ho about flex. it was about doing positive things and about raising awareness. i have more pride in our brand. i am excited to tell the story. lemonis: it was one of those moments where everybody had a breakthrough at the same time, whether it was brad realizing that he came to the company for the right reasons and trevor realizing that his story, it resonates with people, but most importantly, he's able to feel proud about it. proud of you guys. nice job. nice job. nice job. travis: thank you. we need to slow down, take our time. lemonis: the new display case has come in, and so have the new watches. travis: make sure that they're perfect. make sure that the bands and the faces, everything fits perfectly. man: that looks good. lemonis: so, today's the day we're gonna pitch the flip flop shop. ♪
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trevor: marcus. good to see you, buddy. travis: been all right? lemonis: looks awesome. couple changes here and there. why don't we get this inside? looks awesome. finally watches that have color and vibrant, beautiful patterns on them. i'm blown away with how good they look. this pattern is amazing. when you saw these out of the box, what'd you think? trevor: i lost it. lemonis: the watch that trevor made for his mother, it is really pretty and it's going to resonate with people. pull the display out and take me through it. travis: we color coded each individual cubby so there was no confusion what each thing represented. lemonis: okay. travis: we added the causes to the front. lemonis: okay. travis: we added brand information. lemonis: i think it looks amazing. and you know what it doesn't look like? rushed. i'm very proud of what you guys have done. very proud of you, okay? all right, let's go. make sure your setup's right, put your boards in order. hello! travis: hi, guys. lemonis: how are you? brian: trevor? brian curin. trevor: nice to meet you, brian. thanks for coming in. travis: thank you for having us. brian: how much do you guys know about flip flop shops? trevor: we're very familiar. travis: i buy my rainbow sandals there.
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brian: awesome. the concept's been around since 2004 and quickly grew. we're all over the u.s., canada, caribbean, middle east, south africa. travis: that's awesome. trevor: we're on a mission to create change. each watch represents a different charity that we've partnered with to give back 10%. travis: so, if you look at, like, this location, if you can sell one watch a day at an average of $55 per location, we're gonna do $1,650 on average per month per door. now, if you extrapolate that out to, say, 120 locations, then you can do $2.3 million in total revenue. and 10%, we'll be donating over $200,000 to those in need through our giving program. brian: watches is a tough one. you know, every article you read lately, i mean, watch companies in general, it's not easy, right? they're having a tough time. we're flip flop shops. we don't carry watches at all.
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lip flop shops. we don't carry watches at we do have some accessories. we're starting to expand that. travis: it's a great item to match with, you know, you get the blue and yellow flip flop, you got a watch that matches that. brian: would we be competing as a retailer, then, with your online direct to consumer with this specific line that you're offering us? we're not gonna trade dollars, right? we already get customers 'cause we're in the best real estate, best markets. what are you going to do to drive customers to us? travis: we have a couple hundred thousand social media followers that we obviously market to. we're working with russell brunson, the inventor of clickfunnels, so that each unique person who visited our site and fell off, they'll get re-marketed to.
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brad: and i'm currently e-mailed daily asking, "where can i go" -- like, "i like your watches online, but i want to go touch and feel them. i want to see them." there are flip flop shops everywhere, so they'd be able to go to your closest flip flop shop. brian: why are you doing this now? brad: well, because of our causes. trevor: we truly want our customers talking about their cause that's on their wrist. i'm wearing a watch that's actually a special edition in honor of my mom, and i lost her a few years ago to breast cancer. so many people see this on your wrist, and i'm not very good at talking about it, but if someone asks, i can. when i wear this watch, it's like having a piece of her with me at all times, and i get to tell her story every day. brian: the story and everything, i can tell you guys are pretty great guys, so, you know, we appreciate you guys showing it to us. marly: i believe that it does have a lot of potential with the causes, and it resonates. every cause is gonna resonate with someone. i think that's what's gonna sell this product. brian: there's a real story behind it of where these came from. that's what makes this special. and if you guys can tell that through the marketing and the packaging, which it looks like you guys have really got a good start on that
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and where you're headed, we can absolutely tell that story to every consumer that comes in our door. lemonis: looking forward to doing some business. brian: we are, too. i really appreciate it. marly: thank you so much. lemonis: thank you so much. marly: it's a pleasure. lemonis: when i first met these guys, they didn't have a direction, they didn't know who they were, but watching them today inside the flip flop shop, they collaborated really well. maybe the biggest win for me today was seeing trevor really be comfortable with talking about his mom and the story. all three of you guys did an amazing job. every question they had, you had an answer for it. they've built something that has energy and enthusiasm with a really good price, but more importantly, a great purpose. at a minimum, i expect them to do a million. i'm very proud of you. brad: hell yeah. trevor: thanks, marcus. ♪
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>> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ to bring a child's imagination to life. hi. i'm alex furmansky from palm beach, florida. i'm raising $100,000 in seed funding for 5% of my heartwarming company, called budsies.

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