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! lemonis: tonight on "the profit"... -damion: come on in. -lemonis: wow! this thing's beautiful. ...two english gazebo makers are chasing their american dream. you guys build these from scratch? damion: everything. we design it, we manufacture it, and we install it. lemonis: but while their product is a thing of beauty, the business is anything but. damion: patronize me like that. -that's what you do. -simon: i'm not patronizing you. damion: little things like that -- that's what pisses me off. lemonis: their process is amateurish. damion: we have to drive a mile down the road to use the restroom. lemonis: their marketing is misguided. how do you acquire your customers? damion: 99% of our business comes from these fairs. lemonis: and their relationship is at a breaking point. damion: you're making it out that you just sat back... simon: i'm not making it out at all. he asked me, so i told him. damion: ...drinking a whiskey, smoking a cigar. lemonis: if i can't help them get their house in order,

this company will fall to pieces. damion: it's so hard for me because how hard i've worked to get here. ♪♪ 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." ♪♪ based in hilmar, california, kensington garden rooms manufactures handcrafted, custom gazebos fully fitted for outdoor entertaining. owners damion merry and simon johnston learned their craft in england then brought it to california in 2012. ♪♪ while the quality of its product is top-notch,

its high cost makes it a luxury item most people can't afford, leaving kensington struggling to achieve real growth. simon: we can keep doing this for another two or three years, and, you know, 4,000 or 5,000 bucks each a month, you know, keep all the customers happy, but what's the point? lemonis: these are not your garden-variety gazebos. the fact that they're built by hand from the finest wood gives them a real competitive edge. with the right process in place, i believe we can make kensington garden rooms a real leader in its field. ♪♪ [ riders screaming ] i'm in paso robles, california, at the mid state fair, where apparently kensington garden rooms sets up shop each summer. i was trying to understand why i was visiting a gazebo manufacturer at a carnival. there's everything from carnival rides to fried fritters and games. but to buy a gazebo? it didn't make a lot of sense to me.

-how are you? -damion: lovely to meet you. -damion. -lemonis: nice to meet you. damion: nice to meet you, marcus. -lemonis: is this your setup? -damion: this is us. lemonis: wow! this thing's beautiful. you guys build these from scratch? damion: everything. we design it, we manufacture it, and we install it. lemonis: oh, my gosh. what does something like this cost? damion: typically, between $25,000 and $32,000. lemonis: 32,000 bucks? damion: but that's with everything -- the furniture, the wine cooler, the fan, the heat lamp. -lemonis: what is it made of? -damion: cedar. lemonis: the quality looks amazing. i was blown away by the gazebo. i mean, i had never seen anything like this. absolutely beautiful. even the smallest of details were right. the craftsmanship was amazing. i mean, it was honestly a piece of art. what does it cost to make this? damion: it's about $12,000 materials, and then the labor is about $2,000. lemonis: this gazebo that i'm standing in they sell between $25,000 and $32,000. it costs him about $14,000 to make it -- 45% gross profit. those are amazing margins. but there aren't a lot of people that can afford a $30,000 gazebo. if damion and simon can get their costs down,

they could lower the price to the consumer and tap in to a much bigger market, all without sacrificing profitability. damion: so, the buckingham is the name of this structure. the belvedere is the name of the smaller structure. that's my business partner, simon. we've been best friends for 10 years. lemonis: simon, i'm marcus, by the way. simon: marcus, it's a pleasure to meet you, sir. lemonis: nice to meet you. how many are you selling a year? damion: well, in our first year, we sold seven. in our second year, we sold 22. lemonis: okay. damion: at the moment, we're close to $1 million. lemonis: so you'll do 35 this year, roughly? -damion: yeah. -lemonis: $1 million in sales. damion: yeah. lemonis: with 45% gross margins. and, then, what are the operating expenses? damion: about $200,000. lemonis: so you're gonna make $250,000, which is a 25% net margin. that's pretty good. do you owe anything to any of your suppliers? damion: no. lemonis: so it sounds like you guys are doing pretty good. how much cash in the business right now? damion: $100,000. i'm a firm believer of keeping as much money in the business as possible. we took very minimal money for the first year. lemonis: how about now? what are you making? damion: $4,000 at the moment. i have a wife. i have two babies. and there's another mouth to feed coming. simon: i have a pregnant girlfriend back in england. lemonis: how many employees total?

damion: so, there's myself and simon, and then we have four guys in the workshop. you'll meet jack, and he's an amazing guy, and he's been with us from the beginning. lemonis: and who does the bulk of the actual manufacturing of this? -damion: all of us. -simon: i do. i control the manufacturing side. -lemonis: you do? -simon: yeah. i run all the guys, make sure all the guys know what they're doing, make sure they've got all the timber. lemonis: you're like the foreman? simon: yeah, i'm like the foreman. lemonis: you're sales and marketing? damion: i do absolutely everything i possibly can. i'm in the workshop. i'm sanding. i'm oiling. lemonis: and, so, when you say you do everything, you feel like you do the bulk of the work in the company? damion: yes. lemonis: okay. damion: yes, because i have to deal with everything -- all of the customers, all of the shows, the marketing material. i have to help with the installations. i have to take care of a lot of things and not just the carpentry side. simon: [ chuckles ] i do the bulk of the work. i work seven days a week. i'm in that shop from 10 hours a day, 110 degrees heat, every day. so i believe i work the hardest in the company. lemonis: it's not about who gets the credit and who does more. with them, it is.

it should be about how do we grow the business together, how can i help it? what can i give to our partnership to make it better? damion: i own a third of the company. simon owns a third of the company. lemonis: who owns the other third of the company? -damion: my investor, kab. -simon: excuse me. damion: he helps with the website and the financial side. lemonis: and he invested how much? damion: $120,000. when we originally came over, we were vulnerable, young, english guys. he said, "i'm gonna help you guys out, and i think we can grow it." he invested three years ago when we moved over from the u.k. we're from england, by the way. lemonis: oh, i didn't -- damion: you didn't pick up the accent? [ laughs ] lemonis: i thought you were faking it. damion: yeah. i'm from texas originally. [ laughing ] yeah. lemonis: why did you come to the united states? damion: i was the top salesman for a company in the u.k. selling gazebos. simon said to me, "i can make this." and i said, "and i can sell this." and we said, "let's put some money together, all of our life savings, $60,000." lemonis: between the two of you. damion: between the two of us. lemonis: how do you acquire your customers? damion: 99% of our business comes from these fairs. lemonis: is it typically people that just buy these for their home? nobody buys them for commercial businesses? no vineyards, no parks, no city districts, schools?

none of that? damion: 99.9% is just consumer. lemonis: damion's telling me that 99% of his business comes from fairs just like this. it's probably why they only sell a couple dozen gazebos a year. you have a product that's very niche-y, and you're trying to mass-market it, as opposed to finding the audience where those niche-y buyers will be and increasing your chances. i'll see you guys back at the warehouse. ♪♪ [ tools whirring ] when i walked into the warehouse, i expect to see some sort of assembly process and machinery lined up and some sort of really sophisticated process. instead, it just looks like a garage on steroids. -how are you doing? -simon: how you doing? lemonis: good, buddy. how are you? jack: how you doing, marcus? i'm jack. lemonis: jack, how are you? nice to meet you. jack: really nice to meet you, as well. lemonis: hey!

[ claps hands ] how you doing, buddy? so you really are in the shop. damion: i told you. lemonis: i didn't know you guys were out in the middle of nowhere. damion: this is four acres of almonds. -lemonis: an almond farm? -damion: yeah. it's not really a livable space. we have to drive a mile down the road to use the restroom every day. lemonis: in order to start a business, you got to have some basic things. you got to have money in the bank. you should probably have a business plan. you should probably have a bathroom. maybe i should add that to the three p's -- people, process, product, and how about we add potty? what machinery are you using? damion: we just have standard table saws, standard planers. we did it on a budget. this is the most basic tools you can buy. it's pretty difficult to work in here. it's hot, there's no air-conditioning, there's no ventilation, and the space, we're pretty limited. i mean, we had a big delivery of cedar this morning, and you can see there's not much room. lemonis: this warehouse is crammed, and it's tight. there's crap everywhere. what this warehouse should look like

is the ford assembly line -- raw materials in one area, walk through all the different steps, and finish with the finished good. simon: process is not good. the organization of the whole shop needs to be sorted out. the whole material list needs to be redone. lemonis: is it like bolts and stuff that you're missing? simon: bolts. it could be timber. it could be plywood. lemonis: you go to home depot, and you get that? but isn't it the same things every time? simon: generally, yes. lemonis: so, like, why are you buying it retail? why aren't you getting pallets of it and saving money? if i came over here, you would do better if you had a stock of it all. you're gonna save time on driving to the store. you're not gonna pay retail at home depot. you'd be able to pick up how many hours of labor? jack: a lot. lemonis: when they told me that it costs them $14,000 to manufacture a gazebo, i now know why. no efficiencies. there's no inventory. there's no equipment that's gonna speed up the process. you're not building rocket ships. it's a gazebo. it's wood and bolts. if you could be more efficient with your time,

your margins go up. if you could be more efficient with your materials, your margins go up. instead of making 10 a week, you can make 12 a week in the same amount of time. jack: one of the main problems we have is the tools we buy. we go through two green table saws a month. they cost 150 bucks. and we cut that many shingles, the motor gets burned out. lemonis: because you're buying a cheap one. are you tight with cash to that extreme? this is a time and materials business. you need the right tools, and you need the inventory here. you could spend $50,000 and solve it. jack: yeah. lemonis: you have $100,000 in the bank. why don't you go get the stuff? simon: well, we could, but, you know, damion is always, "we can't spend the money." you know, i had to beg him to buy a chop saw. damion: the one simon wants to buy is 600 bucks. you can buy one for 300 bucks. -lemonis: are they the same? -simon: no. the one that i wanted, it can cut 12 inches. the one that i had to buy can only cut 6 inches. so i have to turn the timber over to cut it twice. damion: that was never explained. lemonis: why don't you trust him to make that decision? damion: i just don't want to buy the most expensive of everything. simon: i'm in the workshop, physically building everything all day. he's sat in an office, at his home,

with his wife and his child. my girlfriend and my unborn baby's at home, and i don't get to see them. it takes its toll. damion: when i'm not at a show, am i not here? simon: well, he asked me, so i told him. damion: that's my wife. how can you complain that i'm at home? simon: i'm not complaining. damion: no, but you're making it out that you just sat back, drinking a whiskey, smoking a cigar with his wife. lemonis: did you just see what the [bleep] i saw? the finger-pointing that's going on between simon and damion right now, not only could it potentially derail the company, but it could potentially close it. these two guys are the heart and soul of this business. if they can't communicate, it's making me question whether i even want to move forward with them. damion: that's what you do to piss me off. patronize me like that -- that's what you do. little things like that -- that's what pisses me off. ♪♪ lemonis: there are moments in time where going fast will kill you, and i don't want you running too fast with my money. this isn't the right deal for me.

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a 4-week trial plus postage and a digital scale patronize me like that -- that's what you do. little things like that -- that's what pisses me off. lemonis: hey, jack, let's you and i take a walk. okay, buddy? ♪♪ jack: i'm in the middle of, like, all of that and always have been. i've made nearly every single gazebo the company's ever installed, working seven days a week, working through the night. lemonis: you feel underappreciated here? jack: definitely. i've put as much time and effort as they have. the only thing i didn't do was invest the money at the beginning. lemonis: well, you've invested your time. jack: i'm 20 years old. i don't have a girlfriend.

i don't have time to go out and meet girls. i can't afford to buy a car. i've come down to at least 50 bucks at the end of each month. lemonis: and they got 100 grand in the bank. jack: and i've gone through arguments like that, and the tension is just building and building and building up. lemonis: i'm troubled by all the dysfunction that i'm seeing, and it's a big red flag. but i'm still willing to study the financials and meet with the other partner, kab, who owns one-third of the business. kab: marcus, i'm kab. lemonis: nice to meet you. i'm hoping he's the adult in the room. kab: there's a cash-flow estimate over the next six months. lemonis: so you're projecting that by december 31st, you'll have $248,000 in the bank? when i look at your growth, 2013, $164,000 of revenue. 2015, well on your way to $1 million or more. hell of a job. i'm in a real weird spot. by the end of the year, you're gonna have a quarter of a million dollars, and you have no debt. and so it doesn't seem to me like you need money.

what do you need? kab: we've talked about how to expand this thing, try to open up a shop up in washington. lemonis: your own house is not in order, and you want to go build another one. you don't even have a place to take a [bleep] in this building, and you want to go to washington. -before you expand it... -kab: yeah. lemonis: ...why don't you get what you have airtight? you guys came here. you're kicking ass. you're young guys. if 10 years from now, the business is making $425,000 a year, and you guys divided that up nicely and make $150,000, most people would kill for that. damion: i want more than that. for me, to trickle along, that's not very desirable. lemonis: that's trickling? you need to have some temperance about your growth. this idea of, like, we want to have factories all over the country, you're not general electric. not yet. why is there a sprint and not a marathon, and why not just do it the right way? damion: my initial thought was to have us collectively to be part of something amazing. lemonis: if you want to be a millionaire in this country,

you shouldn't have the sole purpose of your business be to be a millionaire. you should run your business the right way, do the right things, treat your people the right way. and if you do that and you make a great product, it will happen. there are moments in time where going fast will kill you. look, i'm disappointed in these guys. they want me to finance their fantasy where i just wave my magic checkbook around, and they get to take over the world without some sort of business plan. well, that's not gonna happen. this just isn't the right deal for me. i don't want to invest with you. i'm worried that you want to run too fast, and i don't want you running too fast with my money. ♪♪ damion: [ sniffles ] simon: i think he just had a lot riding on it. he had high hopes. damion: [ sighs ]

for [bleep] sake. [ sniffles ] lemonis: let me grab him for a minute. simon: okay. damion: [ sighs ] lemonis: hey, talk to me. damion: [ voice breaking ] i don't get like this about nothing. it's so hard for me, because how hard i've worked to get here. and i've sort of used you in the last year as like a mentor -- studied, watched, love everything you do. i haven't had, like, a father figure, and, i don't know, the way you do things -- that's kind of how i want to be.

lemonis: i have an idea. -come on. -damion: [ sighs ] lemonis: i usually look at the three things -- the people, process, and product. yeah, i could check the box on the product, but i could not check it on the process. and up to that point, i don't feel like i could check it on the people side. in that moment, he's showing me a level of vulnerability and humility that i like in business partners. simon, kab. come here, jack. what i see here is not what i thought i was gonna see. i didn't know that i was coming to the middle of an almond farm with a shop that is not healthy to work in. it isn't because you don't have money. i'm willing to consider doing business with you guys, but something has to change, 'cause i'm not walking into this. if you really want me to be a part of this business, then i need you to take some of the money that you have and invest and prove to me that you're committed to it. you have to have a real professional plan.

find a few spaces that you think could work. in three weeks, if you guys have a plan, we'll move forward. if you don't have a plan, that will be it. and when i come back, i want to make sure that jack is feeling like he's not an employee anymore. damion: yeah. lemonis: because it tells me how you treat people. -okay? -simon: yeah. lemonis: i'll see you in a couple weeks. -simon: okay. thank you. -lemonis: thank you. i gave them an ultimatum. you invest in your process and your equipment and your people and they get out of this mess of a facility that they're in. i'm not gonna prop up this business by myself. i need partners i can count on. so i'll come back in three weeks, but there are no guarantees. what has kab done? simon: he's been in mexico for the last two weeks. since the day you left, i physically have not seen him. lemonis: what value is he adding to the business right now?

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on a scale of 1 to 100, 100 being the most confident and 1 being not confident at all, i'm like a 20. simon: i think i prefer this one because you got so much space. lemonis: hey, guys. remember me? damion: how can we forget? -lemonis: how are you? -damion: good, thank you. lemonis: the place looks different. what's changed? simon: cut all the timber up so it's all in a racking system. lemonis: parts and pieces are in the right place. simon: exactly. lemonis: and so you spent some of your money on building some stock. damion: yeah. simon: and we bought this new machine. this was the machine that we were spending 750 bucks on every time we were getting some curves cut. the guy wanted about $6,000, and we got him down to $2,000. lemonis: what's that on the board? damion: that's the workshops that i found. so you can basically see what we've got and the potential. so, this is just under 5,000 square feet -- what we're working in at the moment. this one is 6,800 square feet. lemonis: and there's a working restroom here now? damion: two. lemonis: going into this warehouse this time, everything's organized, it's in its right place. they were smiling, and it seemed like there was less tension in the air.

you two haven't killed each other yet? and how did that happen, that all of a sudden, you guys just decided to kumbaya? damion: everything that ever needed to be said, it came out -- what simon doesn't like about me business wise, what i don't like about simon business wise. now i trust him. lemonis: you seem like a calm, cool cat now. -simon: oh, yeah. -damion: [ laughs ] he was quite agitated, but part of that was because he was doing 105 jobs. simon: i've delegated roles. i feel a lot better. damion: we got a reality check, which we needed, and we're friends again. lemonis: simon and damion seem to be more on the same page, and the unity between the two of them gives me some comfort to potentially do a deal. how's jack feeling? damion: we've upped jack's wage, and we also agreed that jack deserves 5% of the company. got a new bookkeeper, and she said she's gonna figure out deductibles that kab would have never even knew. lemonis: what has kab done? both: uh... damion: so, we've put together a business plan. kab did the financial side of it, and apart from that... simon: he's been in mexico for the last two weeks.

damion: and his wife's posting on facebook, saying, you know, "my poor hubby deserves his sleep in a cabana." when we saw that picture, i had my hands in that toilet, scrubbing at those bathrooms like you wouldn't believe. simon: since the day you left, i've physically not seen him. lemonis: you've seen me sooner than you've seen him. simon: correct. lemonis: and remind me of the equity layout. damion: 33% each. lemonis: what value is he adding to the business right now? -damion: it was financials. -lemonis: right now. -damion: nothing. -lemonis: nothing. i understand that kab has less of an active role than damion and simon do in the business. but over the last three weeks, they really needed his help, and he was nowhere to be found. and that doesn't sit well with me. why don't you show me the warehouses you guys found? ♪♪ chet: marcus, i'm chet. nice to meet you. lemonis: how are you? nice to meet you. -is this your building? -chet: it is. lemonis: it's got nice curb appeal. -can we see the inside? -chet: absolutely. it's on a half-acre. the building is actually 9,000 square feet. next door, we own the property there. lemonis: so that building's part of the property? chet: absolutely. lemonis: so that helps.

so you could do storage there and manufacturing here. damion and simon found a more than acceptable space. they improved their process, and they did right by jack. so i'm prepared to make an offer. ♪♪ hi, guys. hey. how are you? -good to see you. -damion: marcus. lemonis: i feel differently about the business than i did the day i left. i'm kind of a big believer in life about grand gestures. what simon and damion did were a number of grand gestures. simon: thank you. lemonis: the business is gonna make good money this year. next year, it could probably make about half a million dollars in profit. and the return on capital is pretty good. yes, it's risky, but if you're gonna bet on somebody, i would bet on you two guys. kab: i'm impressed, too. i'll just tell you, marcus, i'm their biggest cheerleader. i really am. lemonis: you agree with that? damion: um...i think the day when we saw the picture, the one of kab in mexico in a cabana

when we were scrubbing the toilets -- that sort of killed us. kab: i told you i was gonna be out of the country. this is the first time i've heard that you were upset about it. damion: knowing how important that three weeks was, be there and just help us. simon: now can you understand where we're coming from? kab: hmm...no, because i thought it was pretty clear. lemonis: i don't look at kab as i sit here as an equal partner. he didn't do [bleep] in the last three weeks. and so what i have to be careful of is to make sure that i structure this deal in a way that protects my money. the risk that i see in this deal is simon, damion, or jack being diluted because when somebody doesn't have a ton of skin in the game, it's easy for them to think about other options. jack's contribution is worth more than 5%. for me to do a deal, they can't be diluted, so they have to remain at 33%, and jack would have to be at 10%. i want to make an offer. i'd like to offer two scenarios, and you guys are gonna figure it out.

my offer is $150,000 for 12%, but all of the dilution comes from you. in order for that deal to work for me, you have to contribute. kab: okay. lemonis: the other option is that i write a $150,000 check and i buy your position. i'm gonna put $150,000 on the table. it's either gonna go to kab so he gets a return on his investment and i buy his shares, or i'm gonna put $150,000 into the company, and kab and i will share 24%. which option would you like? ♪♪ if your business is in trouble and you need my help, log on to...

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and kab and i will share 24%. which option would you like? ♪♪ simon: we had our concerns. we voiced them. we expect you to do a little bit more, and if you can do that, then we can all move forward as a team. damion: i'd like you to be in the company. simon: he's been our only mentor over the last two years. lemonis: he took a chance on you when nobody -- simon: exactly. lemonis: kab, what's your choice? kab: i want to be in the business. what's your choice? lemonis: my choice is to have everybody feeling like things are fair. do you feel like you're being treated fairly? -kab: yeah. -lemonis: okay. i've thought a lot about how to really drive the business. fixing the process and fixing your guys' relationship is a component. the way you market your business of just going to fairs still feels elementary. we need to be smarter about how we sell. i want to think about the business in three different marketing components -- mass marketing, target marketing, and then commercial. number one is mass marketing, like they've historically been doing.

the second is target marketing for people who are actually in the market, like at home-improvement stores. and the third is commercial companies, like vineyards or boat and auto dealerships. i'll have 12% of the business. kab will have 12%. i'm still gonna be 100% in charge, okay? -damion: yeah. -lemonis: so we have a deal? -you're okay with it? -kab: i'm good. -lemonis: you're happy with it? -kab: yeah. -lemonis: all right, guys. -damion: over the moon. simon: thank you. lemonis: thank you. do you smile much? -simon: i do. -lemonis: you do? simon: i just don't want to give too much away. that's all. -i've got a question. -lemonis: yes, sir. simon: what happens when i go home in like a week? lemonis: to take care of your family and have your baby? simon: yeah. lemonis: we will overcommunicate, and we won't make any changes in your department without you knowing about it. simon: okay. lemonis: you know what i'd like to do? let's call jack. let's tell him what's happening. i'd like you, actually, to tell him. simon: [ chuckles ] -you'd like me to tell him? -lemonis: yeah. simon: i'd like you to tell him. lemonis: no. you're not in charge, remember? simon: [ chuckles ] [ ringing ] hello, jack.

jack: hey there, si. simon: marcus has done us a deal. marcus has said that he would like your percentage to be a little bit more than 5%, so you now own 10% of kensington garden rooms, and i would like to congratulate you. ♪♪ jack, you deserve it, buddy. jack: all i can say is thank you so much, all of you, seriously, for giving me the opportunity here and putting me in this position. lemonis: see you tomorrow, buddy. -simon: good job. bye-bye. -damion: bye. lemonis: let's go make some gazebos. damion: yeah. ♪♪ no. it's got to go this way. beautiful. lemonis: today, we're moving into the new building, and it's very exciting, 'cause we're getting all the new equipment, and there's plenty of room to spread out. look at this place. the new warehouse -- it's like a long assembly line. picture making a car. at the front of the warehouse would be all the raw materials. along the way, there would be all the necessary machinery to make each part and each piece.

and at the end, you would assemble it and have the finished good, and it would go out the back door. nice and clean, nice and efficient. more efficient, more margins. more margins, everybody makes more money. simon: this one has a big, 24-inch blade. press your foot -- voom! lemonis: double as fast. ♪♪ i've asked damion to fly to chicago for a meeting with true value, the home-improvement giant. it's our first step towards target marketing. historically, kensington would go to these fairs where they would see 20,000 people just to be able to talk to 10. we're about to get way more efficient. i'm giving you a chance to pitch about the ability to set up your gazebos at true value stores throughout california. you can talk to people that you know are into their home, and they're into improving their home. this is 4,000 stores around the world. damion: okay. lemonis: your "a" game's required. all right. i'm a little nervous about damion, because he has to realize

that he's not selling to consumers at a fair. he's selling to a very large corporation that wants to know how they're gonna make money and how their customers are gonna get taken care of. heath: thanks for coming in, guys. lemonis: yeah. thanks for seeing us. damion: so, i'd like to show you our garden rooms and our gazebos. we use only the finest materials -- canadian western red cedar for our timber, goose-down back pillows. you've got memory foam for the bottom cushions. our buckingham, which is a 13' x 19', is our biggest seller, and that one would sell for close to $30,000. angelique: i think the product's beautiful. sarah: it's beautiful. angelique: no question about that. i think the question is, does it fit with our store? i can see actual pure space just being an issue. we'd have to convince them that it was worth it to build out one of these. damion: on that point, people don't just have a gazebo. they buy throw pillows. they buy lighting. they buy a barbecue for outside. they're perfect for upselling everything else they have in store. heath: the biggest challenge is it's certainly at a price point significantly greater than where most of our retailers are at.

lemonis: what is that typical price point? heath: bought around $5,000. damion: some of our customers say to us, "we've been contemplating a $1,000 costco gazebo," and they're happy to spend $30,000 with us because they have everything they could possibly need. we actually look after our customers, which is i'd say 9 out of 10 of our customers actually say that's the reason they bought it. lemonis: the starting price point, the most affordable entry level, is what? damion: $15,500. lemonis: i would like to ultimately have it also be known as the true value gazebo. ♪♪ angelique: well, it sounds like the direction that you want to take is very compatible with what we like to do at true value. i think it makes a lot of sense. what are you thinking? heath: yeah, i mean, i would say that we would be absolutely open to that. i think it's a good fit. lemonis: well, thank you very much. really appreciate it. heath: yeah, thank you. lemonis: i'm excited for the partnership. true value was impressed enough with the pitch to take on the entry-level gazebo as the true value gazebo. but i also know that $15,500 is too pricy for true value, so i'm gonna do something about that. so, i want to challenge you with one thing --

something that can retail for $9,995. damion: okay. lemonis: hitting that under $10,000 mark's gonna be a very big deal. damion: what would you want us to make it for? lemonis: if you can get to $5,000, you know, go there, but don't compromise quality. damion: okay. ♪♪ lemonis: your guy right here -- i was sitting at this meeting in chicago. his pitch was airtight. i left there, and i was like, "i think i'm gonna use this guy for some other sell." [ laughter ] how's kab doing? damion: so, we met at the restaurant, and we all shook hands. you asked us, "are you happy with this?" i know he said he was happy. a couple of days after, he sent us all an e-mail, complaining that he wasn't happy. lemonis: do you have a copy of it? damion: okay. lemonis: "to be honest, i'm still feeling like i got thrown under the bus. the whole negotiation was a joke. nobody else had to negotiate anything. why do i feel like i'm getting screwed? did marcus put you up to this?" put you up to what? damion: if you're a man, have the balls and just say, "this is not the deal for me." just be honest. just say it.

lemonis: what do you think he really wants? damion: he said, "it's gonna have to be more than $150,000." lemonis: so is he coming here today? damion: yeah. lemonis: good. he could have actually picked up the phone and called me after and said, "i don't think it's fair," instead of just whispering to the boys. we're supposed to be the adults here helping these guys. that's our role in this process. it feels like we're getting a little greedy here. -kab: how are you, marcus? -lemonis: how have you been? -kab: good. -lemonis: everything goo? kab: yeah. lemonis: so, they mentioned that you had some concerns over the last time we met, and so i thought we could just iron them out. i wanted to hear from you man to man. kab: yeah, the whole meeting felt like i was kind of thrown under the bus. simon: i was just upset at the fact that you shook on the deal, and then you went back, and you said that you weren't happy about it. damion: i honestly felt, the way you described it, it was fair. as i said, without kab in the beginning, we wouldn't be here. but at the same time, i've sold every single gazebo. simon's made every single gazebo. i think our value of the company is a lot more than yours. lemonis: i know that on the surface, you feel like you got a raw deal. i wouldn't have made the investment without them having more equity,

because i can't take the risk of them being a flight risk. i need them to be so stuck to the tar that they have a lot to lose. the goal in my mind was to make sure that the people that were doing the work financially benefited the most and the people that were just investing would not get the same kind of return. kab: the offer to buy out, but i considered the value of the company was too low, and so it wasn't really an option. lemonis: so what are we doing? kab: i think i want you to buy me out. ♪♪ damion: do you think there's any carpentry methods that would reduce this price? simon: no. to reduce the price, it's gonna look bad. this is it. there's no more of getting it down.

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just like you were doing the accounting. and so now after you're walking away with double your money, you're now telling them to write a check. you're getting $250,000. don't bring up your son getting paid after. it feels uncomfortable to me, 'cause i'm overpaying you for shares that i don't think are worth $250,000 just to get you the [bleep] out of here. and so if you have to take a couple grand and give it to your son for doing some work for a business that you owned a third of, it doesn't seem, like, totally ridiculous to me. does it? kab: a little bit, just as an integrity thing. lemonis: now it's an integrity issue? damion: i believe you took him to hawaii for the work that he did on the website. you paid for him and his family to go to hawaii. kab: "let's go to kab and just take everything from him." that's how i see marcus working a little bit here. lemonis: that's how you see marcus working? kab: a little bit. lemonis: i can make this really simple for you. deal's off the table. we're gonna stick with the original deal that everybody shook hands on. you're gonna have 12%, i'm gonna have 12%, and these guys are gonna go work and make us more money. you got greedy.

you were offered $250,000, and you then come back and tell them that they don't have integrity 'cause they're not paying your son. a ton of respect for you until that moment you asked for them to pay a bill for a company that you are a shareholder of. let's move on. let's get back to work. kab: okay. ♪♪ lemonis: i want you to make a gazebo that will cost you between $5,000 and $5,500 to manufacture, but i want you guys to make it together. -communicate. -damion: yeah. lemonis: so let's get that paper and get that sketch done. simon: okay. damion: i want us to work with getting the price down with plyboard on the underside. simon: i just wonder how bad it's gonna look. damion: i want us to start doing it smart now. simon: yeah, but don't jeopardize on the quality. it's the one thing that we stand by. damion: do you think there's any carpentry methods that would reduce this price? simon: no. to reduce the price, it's gonna look bad. you understand what i'm saying? this is it. there's no more of getting it down. hold on a minute. let me just think.

we could pin all the deck boards down, which would reduce the labor cost. damion: so have them just pin, pin, pin. simon: exactly. it's gonna take maybe an hour to do the deck boards instead of maybe three hours. and then we can probably use the thinner fill, and it's still watertight. that one is literally half price. so effectively, we can make it quicker and for cheaper. damion: still sticking by the quality. simon: yeah, exactly. damion: so if we just say $5,400, that's a good number. they can sell it for $9,400, $9,900. lemonis: all right. i'm happy that i'm seeing the guys finally communicate. but for me, the real test is what happens when i'm not here. ♪♪ -how you doing, my man? -jack: hey, marcus. lemonis: i'm heading back to kensington today to check on the progress of their lower-priced gazebo for true value. -you had your baby. -simon: yes, i did. lemonis: congratulations, my man. what's happening?

damion: myself and jack got the true value gazebo ready, built. lemonis: you did? damion: i'll show you it if you like. lemonis: okay. and so what changed? damion: the furniture and the inside of the roof. lemonis: and i love the way that looks. what's the inside of the roof? damion: so, before, it was the tongue-and-groove boards, like this, and now we've done a weatherproof, marine plyboard. lemonis: what did simon think of it? damion: he wasn't over the moon about was -- lemonis: that's too much of a cutting of a corner. what happened since i left? damion: we were all on board, and simon goes to england, so i had to run the business, get these made. lemonis: did you communicate with him? damion: yeah. sent him pictures. lemonis: he ignored you? damion: he could have just checked in a bit more. lemonis: we're getting back to the same issue we had before, which is that you guys aren't communicating. -hey, si. -simon: yeah? lemonis: hey, buddy. so, i want you to explain to simon what you said to me. we're gonna work this [bleep] out so we don't ever have to do this again. damion: i'm just annoyed that there wasn't as much contact as i would have hoped for. i think the one person i was looking for contact from was you. simon: it's difficult to keep a conversation going.

it's like a text here or there. you know, i speak to him every four or five days, and he sent me a picture of one of the in-stores that he'd done, and i was talking to him about it. i've done my best. i mean, i was trying to balance everything, you know? lemonis: you're not even listening to what he's saying to you, are you? -damion: i am. -lemonis: i can see it. you're not even really listening to him. you started looking around. you've totally checked out of the conversation. i'm not letting you off the hook right now, 'cause i don't believe you. i just don't believe it.

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you started looking around. you totally checked out of the conversation. if this relationship's gonna work,

you guys have to be able to look at each other eyeball to eyeball and say something, and it is kind of on you for not communicating. and you have to stop thinking about communication like conflict. if you guys don't communicate, this whole thing crumbles. -damion: yeah. -simon: yeah. lemonis: i didn't like the wood in the ceiling in there. simon: i don't like it, either. lemonis: we're gonna go back to the right way. i want you to do it together, and i want it to be perfect. ♪♪ damion: we could possibly put something in with a solid cedar wall at the back to give it that really nice, high-end finish. simon: yeah. that would be good. damion: so if we use the solid canvas, which can be rolled up and down, that's gonna save us another $150. simon: one thing would be using nails instead of screws. the labor cost and the time is gonna be quite significant. damion: time to start saving money. simon: i'm gonna get on with it. ♪♪ lemonis: i'm headed to true value in northern california. i'm gonna see the new prototype gazebo for the first time.

guys, what do you think about how this came out? damion: love it. lemonis: i mean, the attention to detail is fantastic. damion: thank you very much. lemonis: from what i saw that damion had originally put together for the prototype and what i'm seeing right now, it's totally different. the attention to detail that makes this thing worth $10,000 comes when simon puts his hands on it. the edges are straight. the corners are meeting in the right place. the wood is smooth. the roof looks lined up properly. you can tell that an expert put this together. i want to go through the economics, and so give me our manufacturing costs. damion: so, it's $2,000 in lumber, plus another $500 for the roof, $1,000 for the labor and the delivery. lemonis: i'm impressed by what these guys have been able to do. i gave them a target manufacturing cost between $5,000 and $5,500. they've been able to hit a target of around $3,500. that's allowing them to wholesale the product for less,

subsequently allowing the retailer to retail it for less. all of that means more volume. if three a month sell here, it could generate a whole business worth of revenue. damion: yeah. it's worth it. lemonis: well, why don't we greet some customers and kind of get some feedback? welcome to kensington garden rooms. -simon: i'm simon. -dawn: dawn. -simon: nice to meet you. -lemonis: isn't it cool-looking? woman: very cool. lemonis: so, this is all handmade. damion: and we include things like this umbrella canvas, all of the furniture. lemonis: have you ever thought about having a gazebo? woman: absolutely. lemonis: we have an arrangement with true value where this one will sell for under $10,000. woman: oh, wow. woman #2: i've always wanted a gazebo, actually. lemonis: there's been more people in the first half-hour of standing at true value than there was in four hours standing at the fair. the number of buyers that could potentially buy this product tripled, quadrupled, times 10. -how are you? -rick: i'm rick. lemonis: i'm marcus. how are you, sir? i'm marcus. nice to meet you. what do you think of the product? -tom: it's gorgeous. -lemonis: okay. tom: what i'd like to do is keep it with our nursery products outside. lemonis: thank you. we're ready. let's move it.

i'm excited. simon: watch the roof. we're gazebo surfing. ♪♪ jack: where we are today, kind of start pinching yourself every day. if there is an issue, we speak about it. there's no raising the voice. there's no argument. it's exciting. damion: i feel sophisticated. we were making these in our garage, and now it's paid off -- big contracts, beautiful workshop, new business partner. it's unreal. lemonis: i think the only thing that i ask of the three of you, other than you run a good business and take care of the customers, is to treat each other with respect. communicate. if you have an issue, sit down and discuss it. just be a team. when i first met you, nobody was respecting you, and you two were killing each other. you control what happens, and if this business is gonna be successful, it's gonna be because of what you guys do, not because of what i do. we appreciate you. jack: thank you, marcus. simon: thank you. lemonis: be good. don't kill each other. damion: we won't. lemonis: all right, my man. be good, okay? this business went from being in an almond field

to being in a real warehouse in a real company in a very short period of time. and the boys -- they're communicating properly. and that's the thing that i'm happiest about. damion: i'm happy to be in business with you both. simon: and me. we're almost there, my man. ♪♪ [orchestral music] male narrator: this ordinary office is a gateway to another world... one of financial independence and life-changing opportunity. - so are you nervous? - yeah. narrator: because in this room... - hi. - hi. - how are you? i'm nadia. - robin. narrator: real job interviews are about to unfold. - yes, we have our first candidate here. narrator: with 20 cameras capturing every second. - let's do this. narrator: see the tricks... - are you good with names? - absolutely. - what were our names? - oh, no! narrator: the triumphs... - you passed that test. narrator: the blunders.