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tv   The Profit  CNBC  November 15, 2016 10:00pm-11:01pm EST

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communication. >> we will control you hard. breaking news at
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knows who the finalists are. if that's true that is not the way this is supposed to work. that's not the way to get it done. done. it will ta
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>> come in. >> thank you. this is unbelievable. small. they started selling cookies out of their house in 2013. now they have really taken off.
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with the retail space, several employees, and a catering service. can i try something? >> of course. >> i want to buy a box. a big box. can i have a cafee. what did you do before this? >> i'm a dentist. >> you're a dentist? and you're selling sugar? >> yes. >> how much did that pay? >> they pay me 1,000 pesos. >> around. >> that's about $50 a month. for a dentist. and you make more money selling doughnuts? >> yes. >> in one day? >> not in one day. >> pretty close. >> discuss about it later. >> is it difficult to talk with the cameras because you worry about people seeing it? >> yeah. >> tony and sandra are clearly doing well. but this is cuba.
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and you can see the anxiety set in when i asked about money. like others i would meet, they didn't want to say too much. and as a business owner, i respect that. but their steady flow of traffic told me what i wanted to know. i guessed they were making at least $100 a day. amazing when you consider that most cubans live off $300 a year. tony and sandra's bakery may be pulling in 35,000. >> you look like you like it. >> i can only say off the record. people probably think, oh, this is just a bakery. no. it happens to be thriving entrepreneurship in the face of entrepreneurship in the face of very strong head winds of regulation. they weren't taught this. they didn't go to school for this. she's a dentist. he's an engineer.
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can i see the kitchen? >> yes, of course. >> this is big. what's in here? >> that's an oven. >> this is an oven? >> yes. >> from 19 -- >> probably 1920s. >> and it works perfect? >> yeah. >> the workers i met in the kitchen, two engineers and a lawyer, like their bosses, t th make more here than they did at their government jobs. where does everybody come from? where are they trained? >> we train them all. >> so they came here looking for a job, you took their engineering clothes off, and you made them chefs? >> yes. >> and taught them step by step by step. >> what they got to do. >> everybody likes sugar. >> yeah. >> right? everybody likes chocolate too. but on the day i visited, there wasn't any. why don't you have the ingredients? money? >> no. because there are not available right now. >> chocolate is not available?
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>> the exact kind of chocolate we use, dark chocolate, like more than 40% of solids. >> so it is not available. >> right now it is not. >> you cannot find it at any store. >> any store. >> i would like to see where you buy all your products. can we go there? so everything here is locals? >> yes. >> what ingredients would you come here for? >> we buy lemons, carrots, guava, pineapples, stuff like that. >> wholesale as we know it doesn't exist in cuba. holy cow. there is no costco or walmart, just whatever is available from private vendors at the local market. >> this is papaya. >> this big? >> it is very sweet. >> hey. >> humongous. >> you won't find eggs or milk here, only government stores are allowed to sell those. and they're often in short
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supply. when it comes to running a business, there are obstacles. everywhere. for starters, you can only work in one of 201 government approved professions. approved professions. that's right. there is a list. you can be an accountant, a plumber, a palm tree trimmer, and, of course, a baker. i love the feel of the whole place. if you wanted to open up five of these all around havana, can you do that? can you have five? >> there is a law against that. >> one person -- >> one license. >> one license. >> so you can franchise? >> franchise, no. franchise is a big enterprise, you know that. the burner brothers license is in sandra's name. they can only open a second bakery if tony applies for a license in his name. and so i'm fascinated by the fact that you have become students of the rules.
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>> yes, we have. >> i think what is unfortunate is that you have to spend time studying the rules as opposed to spending time growing the business. >> it makes it unique, you know. the reason why i see an opportunity here, it is because it isn't easy. if it were easy, you know you can get anything you want, you can get a license anytime you want, you can open as many businesses as you want. you know how many people would have opened a bakery? >> tony and sandra are smart enough to know they could leave and they could take their trade skills of baking and merchandising and advertising anywhere, but they see the window of opportunity and the ability to be big in the future is greater here because they know that the competitive landscape is not as competitive. coming up, tony and sandra have big plans. one right here? >> yeah, that one there. >> but there is just one thing in their way. me. me. i'm telling you as your new friend, you have something special. don't ruin it. but first, stitching a better
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life. one shirt at a time. so i need a little extra cushion.
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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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♪ forget what you think you know about cuba. forget the old cars, the cigars, the che guvarra souvenirs.
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i saw a new cuba with extraordinary talent in the most unexpected places. how are you? i'm marcus. she was shy about her english. so i brought along a friend to help. so do your customers come back through here? >> translator: yes, but most of my clients are -- >> welcome to my house. >> this is where corennia lives and makes her living. this is your office? i squeezed into a workshop, barely bigger than a closet, with sewing machines from another time. >> translator: to everyone else, it may look very small. but to me, it is really big. whatever i own today is because of my sacrifices. >> she is a seamstress and one
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of havana's top wardrobe designers for tv and film. she's done so well, she owns the business and this house. in cuba, that's huge. this is linen? she's called the queen of the guavara, a traditional cuban shirt, her specialty. how much did you sell them for? she told me she charges $60 a shirt, materials and labor costs $30. it takes a day and a half to finish each one. this is made one at a time. >> translator: one by one. >> i think we should charge more. >> translator: yes, i know. but in cuba, it will be a hard sell. >> in a good month, she sells eight shirts, making 240 bucks in profit. almost ten times the average monthly salary here. so where do you get the fabric? >> translator: that's a loaded question. >> loaded because like many
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cubans, she's forced to buy from el mercado negro. why is that the black market? >> translator: it is not in the stores. >> i want my own shirt. can you make me a shirt? >> translator: it will be my pleasure. >> luckily, there was enough linen left for me. this is my shirt. it takes a lot of measuring. i need a little extra cushion. make sure you keep plenty of room. this is probably a $98 shirt, retail. in the u.s., that is. to raise her prices in cuba, she needs a store, but that's tough here. the government controls most of the clothing industry. >> translator: when you start to get confident, obstacles and limitations come up. you cannot do this or you can do
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only this much. >> and who tells you you can't? >> i'm not sure. i guess it comes from the government. >> that's the thing here. no matter how hard you work, you can only go so far. but she refuses to give up. come on in. how are you? and then i met the reason why. her 5-year-old daughter camilla. she works very hard, doesn't she? >> translator: very much. and i'm very proud of her. >> i know she's special. my angel. >> you're an angel? that gives you tears of joy? against the odds, she made a better life for them both. but it may not be enough to keep them in cuba. does it scare you? >> translator: of course. it was never my dream to leave my country. i want my daughter to grow up where i did.
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>> but? >> if i want a better future for her, i have to consider the possibility that she go elsewhere. and that really makes me sad because i love my country. >> i can see the day coming when she'll have to make a choice. and it won't be an easy one. nice to meet you. you have a wonderful mother. >> thank you? >> thank you. >> gracias. i'll pick up my shirt in a couple of days. this is great. i got a hug too. after leaving corennia and her daughter, i took a walk up the street. i wondered if people here are running out of patience. as information becomes more available to people and they see what their options are, people are going to start to go after it. not because they want wealth or they want fame, because they want something different, they
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want something brighter. it feels like you took a picture in 1965 and nothing happened. it is crazy. how are you doing, buddy? okay, i'm going to show you a game. put your hands here. ready? the kids in the neighborhood didn't seem to have a care in the world. play? but their future looks bleak unless the cuban economy improves. ♪ i turned to someone who has been watching the situation closely. >> this was main street of old havana. >> ted henken is a professor of latin american studies at baruke college in new york. he visits cuba often, and has written expensively about its new business landscape.
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>> the changes have been significant, but woefully insufficient. >> he told me that cuba is going broke. the price of socialism is just too high. >> will you get housing, you get education, you get health care and you get a job. basic bottom below which people aren't allowed to sink. but that bottom has become frayed, it has lots of holes in it. one of the reasons why the state is allowing more economic freedom, it needs to relieve itself of the burden of providing for people. >> the economic troubles have led to another problem. >> the cuban population has stopped growing. and they have a major problem with people choosing to leave the country. mostly for the united states. they want to be connected to the rest of the world, want to have opportunity now. especially young people. they don't want to have the same problem their parents did, waiting for the future to come and it never arrives. >> that's good. a taste of capitalism has
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helped. but it is just a taste. >> the government is moving in a direction of economic opening but it is trying to control that opening. >> the cuban government continues to control almost every aspect of daily life. there is no free press. the internet is censored. small business owners have been shut down without warning. in 2013, the state went after private clothing stores. >> the government closed them all down because it was competition against the government monopoly on retail outlets for clothing. >> when the government runs a business, it is not always pretty. i walked into a state owned store, unlike anything i've ever seen. can i buy a blender? the inventory was meager. largely a result of the u.s. embargo. this one sold mostly blenders and tvs. who is the manager? >> he's not here right now. >> and don't come to cuba to buy sneakers. so the government has a monopoly
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of importing clothing made in other countries and then reselling it to the cubans. a private person can't do this in cuba. >> can i buy shoes? i cannot buy shoes? >> since december, they haven't had any new merchandise. >> since december? >> next week it is coming in. >> hopefully. >> up next, the tables are turned when capitalism collides with socialism. what did it cost to build this house? 5,000? 10,000? >> i don't like the kind of -- >> questions? >> questions you are asking.
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cuba is a country marked by neglect. many of its beautiful buildings crumbling into dust. still, there are places that speak to what once was and could be again. but after a few days in town, i wanted to see more. so i hit the road and headed about 25 miles southwest to meet this man. how are you doing? marcus. >> fernando. >> in farming circles, fernando is a superstar. what do you make here? four years ago there was nothing growing here. >> we grow more than 60 types of vegetables. >> today, row after row of fresh green produce.
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fernando has a ph.d. in agriculture. he used to lecture around the world. >> we teach people about the environment, and how they can eat better. >> but when the state okayed farming as a private business, he quit the classroom and got his hands dirty. does this need to get delivered? >> we have prepared this already. >> let me help you load it up. twice a week he packs up his aging soviet sedan, selling his fruits and vegetables to 25 of havana's top restaurants. all that arugula adds up. how much would you get for selling all of this? >> that would be about $400. >> that's not bad. >> not bad. not bad. >> but he's not in it just for the money. fernando sees farming as a way to promote socialism. cuba's economic model since the revolution. he doesn't even own the land. >> we didn't buy the farm. you cannot buy land in cuba. >> the state merely allows him to work on it.
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>> so the land is really -- >> social asset. >> i understand. you say social asset, i say government asset. >> social. in a capitalistic way of thinking, you can take benefit from that square of land, but that square of land will be there for thousands of years more. the land is a common asset. >> okay. he not only pays his workers more than the average government wage, he feeds them and houses some of them too. fernando, a socialist to the core. so i wondered how he got his new house. beautiful. it is very smart how you built it. so the breezes can cross. what did it cost to build this house? >> what you are asking me difficult things for -- i cannot tell you how -- how it cost. >> okay. 5,000? >> maybe more. >> 10,000? >> less. >> okay. and where do you get the money to do that? do you borrow it from the
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government? do you have family send it to you from america? >> i don't like the kind of, let's say -- i don't like -- >> you can tell me. it's okay. >> i don't like the kind of -- >> questions? >> -- questions you are asking. >> does it make you uncomfortable? >> maybe. >> okay. he told me the money came from lecturing overseas. not something most cubans get a chance to do. let me tell you why i'm asking. i'm not trying to ask for any reason other than to understand how -- >> i can start asking you about your private -- >> sure. >> how you invest? >> i don't, cash. i don't have any stocks. i invest in other people. i invest in people like you. >> how much you pay to your employees? >> $12.25 per hour. that's the minimum. if you work for me, that's the minimum you make. >> do you have only one wife or more than one? >> i actually -- i'm not married. >> you're not married? >> no. >> okay.
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are you gay? >> no, i'm not gay. any more questions for me? >> yes, let me think -- >> okay, anything you ask me. and i like mango juice more than orange juice. fernando seems satisfied. and our talk turned back to his farm. can i see the bees? i'm not going in there. >> yes, i have dress here for you. >> whoa, whoa. >> the other way. it is going to be hot. >> i don't care. as long as i don't get stung, i don't care how hot it is. when it comes to bees, i have no comfort zone. >> we started here with one beehive, 2 1/2 years ago. now in this moment we have 08 hives. >> the 80 hives yield about three tons of honey each year. fernando is forced to sell most of it to the state for $900 a ton. the state resells it for more
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than three times it. you sell it for $900 -- >> they cover all the costs of transportation. >> that's nice of them. >> they give advice also for us. >> they give you advice. >> yeah. >> i can give you advice, it won't cost you 3,000. >> at least the government isn't buying his vegetables. those he makes real money on. later that day, the greens we packed up at the farm arrived at labarita. it is one of havana's hottest restaurants, and a magnet for celebrities, like madonna, rihanna, beyonce and jay-z. enrique nunez owns the place. >> welcome. >> this is beautiful. >> he grew up in the building. people now eat where he used to sleep. this is your original apartment?
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>> exactly. that's my -- >> this is where you grew up? >> my bathroom when i started the restaurant. >> very cool. hi, folks. >> enrique's success took more than a little creativity. cuban laws limit a restaurant license to just 50 seats. so he figured out a way to add another 50 by applying for a cafeteria license. so how many seats do you have? >> 100, but we make two seatings. >> two seatings, 200. how much does it cost for one person on average to eat here? >> like 40. >> 40. you do 8,000 in a night? >> not every night. >> but in a good night you'll do 8,000? >> best night. >> worst night? 3, 4? >> less. >> no, no, no. i've seen that before. cubans don't want to call attention to the money they're making. but enrique's success is obvious. he just opened a new rooftop bar with great views.
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the tourists are drinking it in. what do you think of the view? >> best part, best restaurant in havana. if anyone wants to experience real life in cuba, come here, you can see. >> enrique knows dinner here costs the average cuban almost two months salary. so they stay away. he wants to change that. less tourists, more locals? >> more locals. less tourists, yes. that's one of my dream. >> and how do you think that becomes possible? >> i hope the economy, our cuban economy can grow and develop. >> with 40 employees, enrique is helping to grow that economy. even though 20 of his best workers recently left for america. nothing is easy here. i have a lot of respect for you and a lot of admiration, but now i want to eat your food. >> yes, of course. >> let's go eat some food. up next, you ever go
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fishing? >> no. >> travel down any road in havana, you'll find a surprise at every turn. will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services
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just ask your doctor about taltz. now's your chance at completely clear skin. afoot and light-hearted i take to the open road. healthy, free, the world before me, the long brown path before me leading wherever i choose. the east and the west are mine. the north and the south are mine. all seems beautiful to me.
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at burner brothers bakery, business has been sweet for tony and sandra camacho.
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so sweet they're setting their sights on a new venture, and i wanted to check it out. where is the building that you guys picked? >> there, that corner. >> the white one? >> yes. >> they have gone ahead and bought a new space. in a real hot spot, where the cruise ships dock. with a record number of tourists visiting cuba this year, this is prime real estate. and i had a lot of questions. how much was it? >> like $46,000. >> $46,000? it is the whole building? >> no, just the bottom. >> buying and selling property has only been legal for five years. and only native cubans can buy in. >> our space starts here. >> i thought they were building another burner brothers. you can't take customers up the staircase. >> we're going to rebuild this. >> these bakers are getting into the restaurant business. >> so you're opening up a fancy restaurant? >> well, we want to make this a
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bar, want to sell drinks. also want to sell meals. >> i'm skeptical. the place needs a ton of work, new stairs, new balcony, new kitchen. i'm worried it is a money pit. what do you think it is going to cost to do this whole project? >> i don't know. $40,000. >> only $40,000? >> well, it really costs a lot more, but that's all we got. >> you have it saved already? >> yeah. >> you sold a lot of doughnuts? >> no, no, no. that money is not from the doughnuts. >> where is it from? >> my dad. my cousin, partner too. >> so it is a family business? >> yes, a family business. >> what do you forecast the business will make in the first year after you pay all the bills? have you put it on paper? >> we haven't done that yet. >> it was clear to me that tony and sandra did not do the math on this one. are you going to be open seven days a week? >> yes. >> so seven days a week, good
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luck, by the way. >> tony and sandra are planning on an average bill of $15 a person. and they're hoping to take in $1500 a day. but with just 42 seats in the restaurant, they'll need a lot of turnover to hit that number. restaurants have one of the highest failure rates of any business. and these two already have a successful bakery. i don't know why they don't just open up a second burner brothers. why wouldn't you duplicate that and build a brand? something that you know? >> burner brothers is something we know because we start from zero and we have something -- >> beautiful. >> okay. this is zero and we will do it something. >> i know you probably won't listen to me. but i'm telling you as your new friend, you have something
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special. don't ruin it. and then i learned something else. they were offered 200 grand for this place. they could profit $154,000 without doing a thing. so my big question is how many years, how many people, how much [ bleep ], how much aggravation -- >> we have to -- >> to get $154,000? right now, think about it, see how much money you're making in the burner brothers and go from there. this is a bad idea. >> okay. >> i'm being honest with you. >> no, no, no, okay. >> i'm sorry to -- i'm sorry. it is never easy telling someone their dream is a mistake. but the numbers don't lie. maybe in the future the government will allow franchising. maybe. when they do, you're ready. if you build a few more burner brothers, you could be the dunkin' donuts of cuba in ten years. i had no idea what tony and
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sandra were going to do. i knew what i wanted to do. get some fresh air. so i called up my favorite taxi driver, armando lee, to do some sight-seeing. we took a ride down the malacon, havana's famous highway along the sea. it is a gathering spot for locals. you ever go fishing? >> no. i don't know how to do it. >> like this. >> no, it is not so -- it is not only that. >> if hemingway could do it, so could armando. we got out to take a closer look. and throw down a challenge. what is this right here, my man? doing a little fishing tournament. whoever catches the biggest fish in the next ten minutes gets $20. >> okay. >> you have to do it with me. >> i'll do it with you. >> 20 bucks. tell me it is not possible. i told them to just keep fishing
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and not worry about it. the sun was fading fast. but there was barely a nibble. armando, not one person, one minute. okay. that's it, right here. bring it, bring it. okay. this is the winner. show them your fish! give him the money. that's it. his father is right there. >> so with a little seed money, perhaps a new cuban entrepreneur is born. coming up, six women, a crock pot and a drive to succeed. >> we are doing what we want to do. we are trying to change our lives.
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there is a word i heard over and over again in cuba. resolve, ingenuity, making it work. it is a way of life here. especially for the new entrepreneurs. sandra, marcus. >> nice to meet you. >> nice to meet you. three years ago a simple luxury like handmade soap didn't exist here. that's where sandra stepped in. thank you for having me. today she and her six employees have turned this modest kitchen into a factory line. >> at present we are selling about 1,000 soaps per month. >> from three years ago, 100 a month? >> sage. >> sandra's business is called de brujas, this is witch's soap. why witch's? >> because witches make magical fortunes with plants. >> i got there just as they
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began to brew a new batch. you put it in here and it makes spaghetti. >> they start with natural soap from the government store. first step, they have to melt it down. and, yes, that's a crock pot. these are some resourceful witches. >> do you stir this? can i do it? >> yes. >> are you sure? >> yes. >> they spoon the soap into molds and it drys for five days before it is wrapped up. you would think the packaging would be the easy part. not here. >> i could use another bag, but i need this one. >> where do you get it? >> from -- >> sandra can't get bags for her soap in cuba, so a relative from the u.s. sends them. what she does next is part martha stewart, part mcgiver. >> comes like a bag for bread, just like this? >> yes. >> and you cut it and make small
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ones? kind of doesn't matter that it is soap. what matters is that sandra wanted to generate commerce and they figured out how to do it. she's taking things that are already produced in different components, bag, the fragrance, the soap that is already finished, and she's reconstituting them and coming up with something that is more special. i wanted to see sandra's store. so i headed down to the artisans market, near the court of havana. i saw booth after booth of private businesses. a few years ago this was illegal. here we go. sandra offers ten different types of soap, each one cost a dollar to make. she sells some for two bucks, some for $2.50. the government charges her $94 a month in rent. so you have to sell 45 soaps to pay your rent?
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right? and how many soaps do you sell a day? >> now we are selling 26 soap. >> today you sold 26 already. >> today. >> i love that you know that. most people don't know that. >> one soap. have to buy one soap for my friend. the market is a huge attraction. sandra should be able to boost her traffic easily, but it is not that simple. you're in the corner. why don't you go to the other corner and do another one? >> it is not allowed to have two stands the same owner. >> same owner. >> same name. >> you cannot have two stands? >> no. >> this sucks. still, there are some things we can fix. i want them to move the sign so customers can actually see what they're selling. take the sign. and what they should be selling is soap. not dream catchers and random trinkets. i don't understand the
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connection. >> i know what you mean. i know what you mean. >> why do you do it? it is no good. >> no. >> for the customer, it is confusing. >> instead, sandra should be selling products connected to soap, like candles or room spray. an easy idea. or so i thought. >> the problem is the bottom. it is difficult to get -- >> what about for candles? >> little difficult, but i can -- we can try. >> i love that about sandra. >> we are making something different. step by step, we are growing and learning. >> for you to be able to grow up as a little girl in cuba, to surround yourself with good people, to make a living for yourself and for your family, with no help, it is a bigger deal than you think.
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a really big deal. is it emotional for you to think about it? why? >> yes. no, no, no. >> why, sandra? what are you crying about? >> i don't know, because this is a way to do what we want to do. because we are our boss and we -- >> control your destiny? >> yeah. this is the way. >> this is one thing that is >> this is one thing that is important before i go. emotion in business is important. if anybody ever takes the emotion out of business, the business will die. up next, a big decision. >> don't ruin it. >> a beautiful souvenir. can i go put it on? and the biggest question of all. if this country doesn't change, are people going to stop trying? when "the profit in cuba" returns.
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a week in cuba, sweltering, satisfying, something i'll never forget. who is number 432? i'll be able to tell people 30 years from now that i had my haircut in cuba, in a communist country. these people have nothing and they figure it out. i am learning that myself that i have to be more resourceful. before i left, i had one final thing to do. >> back here again.
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>> squeeze down that alley way into corennia's home, my custom shirt was waiting. so beautiful. can i go put it on? the verdict, perfect. i love my shirt. the queen of the guayabera earned her title. i've been so hot. the laws don't allow it now, but perhaps soon i can help her sell her shirts in the united states. maybe, just maybe, the shirt could be called camilla e marcos. as for tony and sandra camacho, this is the restaurant? >> yes, it is. >> after telling them not to open a restaurant -- that's a bad idea -- and to concentrate on their bakery business -- you're building a brand, you guys are the burner brothers -- they took my advice and dropped the restaurant idea. they're selling the new space.
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and will invest the profit back into their bakery business. as it turns out, a smart and lucky move. officials have put a freeze on new restaurant licenses, a blow to the fledgling business community. if this country doesn't change, is talent going to be suppressed? is it going to be lost? are people going to stop trying? cuba stands at a moment of possibility. tensions with the u.s. have been eased, the people i met are hungry for the chance to rise or fall on their own. but make no mistake, their fate may rest less in their hands than in those of their government. i'm marcus lemonis.
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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." ♪ and i am her dad, theo. i'm 9 years old, and i've had my business for over half of my life. mikaila's always loved business. ever since she was 4 years old, we noticed that she was a natural entrepreneur. ah, there you go. when i was younger, me and my brother, jacob, would set up a stand and sell lemonade, arts and crafts, painted rocks.

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