Process

I don't understand businesses that use crowdsourcing. I mean these were two grown women asking for $6000 to buy packaging equipment. Why would anyone give them anything? If it is a going concern, they should be able to finance it from earnings. Why the charity route for a business? Also, one aggravating trend I see at small booth sales in the holiday season are people who have a business and push the fact that a certain amount of the proceeds is going to cause X. They have a pretend business with low margins and then they push this charitable giving concept that makes me wonder if they are even in the black or not. I am all for businesses giving to charity, but it just smacks of desperation and highlights that it is not really a business. I just don't like the a business pretending to be a charity or a charity pretending to be a business.

While I agree that KOTA and The Profit are not a good fit, I think that the sparks we saw were a direct outcome of the "hurry up and make a deal" mentality of the show. I think in reality, a deal would be a little slower in coming and both parties would get better due diligence. People under duress will likely make a deal they will regret as they come to fully understand it. Likewise, this is not the first time Mr. Lemonis has expressed disappointment that he did not understand something prior to to the "hand shake." These disappointments are avoidable as business parties get to know each other and have real conversations. On this episode, the Show (and it is a Show regardless of what Mr. Lemonis said on the Precision Graphix episode) is not sharing enough with us. Or they are only sharing what they took the time to find out (which gets pushed into the Show format of filming). I have serious questions about whether the volume of the business (600 boards annually) was accurately stated given the number of workers seen (eight). Also, the Show did not really talk about the owners work with Veteran's groups and that these are some of the obligations mentioned. A few minutes of research shows this involvement. These questions don't mean that Mr. Lemonis should enter a partnership with the owners; I think the final outcome was best for all parties. In business there is not just one solution to a problem. There are many possible solutions and KOTA is going down a different road from the one Mr. Lemonis laid out. Likely the company's valuation will be less than with Mr. Lemonis, but it can still be a going concern if the owners work it correctly.

This was indeed a very different kind of episode. The drama was different as you had someone who had built a business that Lemonis values between $1.7M and $2.5M and was netting $400k/yr. It takes time to change by moving to a focused product line and getting rid of old habits. If I had built such a business and was looking at a new partner, I wouldn't hesitate to ask a question whether the guy thought I was interviewing him or not. The great thing about Lemonis' approach here is that it moves the owner away from decisions that result in waste and inventory. She gets out of manufacturing and can focus on the fun stuff where she can have greater positive impact. Even having a nicer office eliminates the opportunity to have a lot of junk around because she doesn't have the space. Her negotiations netted a slightly better deal (assuming that the existing $400k is correct which lessens the risk of a $50,000/yr payout) than Lemonis' first offer; however, in the end if he helps the company grow to more than twice its existing size (and that was just with Birchbox) then the difference is not meaningful in the long run. The pie grows so big that what you start with is less important. Change is hard and Miranda seemed to get through it ok.

Rehoboth said "I do think the brothers knew how to run the business but they didn't know how to grow the business." I was going to disagree with you on the basis that the business as it existed before Lemonis arrived was only earning 4% on sales and did not have up-to-date equipment. But the brothers did take $160,000 and turn it into a business valued between $540,000 and $810,000* after 11 years. This is a compound annual growth rate of between 11.3% and 15.6%. That's a great return assuming that they have been paid a salary every year. If they were not able to draw a salary, then this CAGR is less impressive because they were subsidizing it and their actual investment is higher than $160,000. *$810,000 from Lemonis' offer of $270,000 for 1/3 of the company. $540,000 just to provide a lower range of value assuming that Lemonis' final offer was somehow generous ($540k is not that far off Lemonis' initial valuation of $160k to pay back Keith & Tina plus $270 for the company).

While watching the episode I thought that Dean was taking too much of a beating, that it was too much of a one person blame vesus a process focus. However, I believe that Lemonis helped Dean out immensely by blaming him. It was undoubtably great pressure, but in the end Lemonis was gracious in his judgement. He said that he would not do the deal if Camping World was not done correctly. Well, Camping World wasn't done correctly but a deal was made in the end. Lemonis was using motivation techniques on both brothers and motivation techniques always feel forced to me. The biggest problem with PG was the leadership/people vacuum. All the pieces were there. They did not really need Lemonis' money, but they needed help in leadership development. Someone else here already said that Lemonis was able to get far more out of his deal if he could get the brothers to lead. Money for new equipment, that is pretty easy. Getting people to change their behavior, that is much more difficult. We haven't seen Lemonis do this so forcefully before, because the situations were different. Mr. Anthony and Mr. FuelF never qualified to get some of Lemonis' tough love. Others did not need it.

Thanks for the interview. Lemonis says that research on applicant companies is minimal to aid in telling the story: we get to see his actual reactions when he finds out the true situation. This is his process for The Profit companies. However, it is not hard to imagine Lemonis rebuking an applicant company with a similar low level of due dilligence ("you don't have a process"). But this process makes sense given the objective of doing the show well. When owners of The Profit companies say that Lemonis is just doing something because of the show, his reaction is negative. But we know Lemonis strives for excellence in what he does and I don't see evidence that the show is any different. It is not a surprise that he does some things differently for the show than he would in "real" life. He is not just maximizing returns on his time spent on the show. He is seeking an acceptable return plus excellence in The Profit, the brand/show/whatever. Another intangible benefit of spending time at a company where things don't work out, is that he gets to see up close and personal how that particular business model works as well as teaching people about People, Product and Process. If financial returns are good and there is growth in the "brand" with excellence, then investment in intangibles makes perfect sense. The applicant companies don't have the luxury of intangibles because their fundamentals are flawed in a way that threatens their existence.