S07.E10: Leaux Racing Trikes, Glow Recipe, Sarah Oliver Handbags, Trunkster

[LittleIggy]

The Purlettes Plus One need a Norma Jean to jump up on...okay, maybe just stand up. Unionize! Unionize!

BTW, Jimmy Fallon was making jokes about ordering Bagel Balls at Starbucks on Friday's show.

[NikSac]

There are some interesting wage and hour issues raised with the purse production. We really didn't get enough details for me to decide, but I'm curious. Laws differ by state, but in general a piecemeal rate has to average out to at least minimum wage, and I wonder if that's the case here.

 

I've been wondering about this too. I have bid for some freelance work online and it seriously gets down to like $.25/hour once you start bidding 'against' people outside of the US, especially. I don't quite understand the rules, but something didn't sit right with me that the purse company was making a fortune off of these bags while the women making them weren't getting that much.

[Trepie]

I agree with all the concern over the payment to the Purlettes. I couldn't believe Kevin was the only one to talk about exploitation with both the kids and the Purlettes and everyone else shushed him. I'm sure for him it's a legal/pr thing but when the guy with no soul shows more compassion than you, maybe you should take a second look, Sharks!!

[basiltherat]

Littleleggy, I think you mean Norma Rae.  Norma Jean was Marilyn Monroe. 

[needschocolate]

The trikes looked like fun, but I don't see a big market for them.  It seems like something you get for the person who is active and already has everything, then they use it for an afternoon or two, and it ends up just taking up space in the garage.  It would be different if smaller kids could use it, but the price makes it an adult thing.  

 

I thought the glow women were good presenters, and I felt sorry for them when they were asked about other retailers selling similar products.  They were stuck between a rock and a hard place  - you don't want to imply that the market for what you are selling is so small that bigger retailers aren't interested, but you also don't want to point out that your competition has thousands of locations and oodles of money.

 

The trunkster suitcase was not worth anywhere close to what they were asking.  

 

I believe the purse lady said that the bags cost $47 to make and she sells them for about $300. The purlette makes $17 a bag, so what is the other $30 spent on?  I am guessing that includes the cost of the yarn, and having someone felt the wool and sew in a lining (or perhaps sew felted wool fabric into a bag, if they are not knitted into bags by the purlette).  I wonder if she was including cost of maintaining the website and filling and shipping orders.  No matter how you look at it, the purlettes are underpaid.

 

One has to report any income over $600 from any one source to the IRS, so bag lady isn't saving the Purlettes from reporting income, even at $17 a bag ($2,652 for three bags per week for a year). She has to pay them at least minimum wage, period. She's not running a charity.

 

It depends on whether the knitters are considered independent contractors or employees.

 

If a elderly knitter bought some yarn, knitted it into a bag shape or knitted a big rectamgle then sold it to the woman, who then turned it into a handbag and sold it, then paying the kntter $17 is fine, if that is the price the knitter was asking for.  In that scenario, the knitter is an independent contractor.  Just like the people who sell hand made stuff on Etsy.  The woman is obligated to give the knitter a 1099 form if she paid them over $600 in a year.  The knitter is required to report it and pay self employment tax (and perhaps income tax) on it.  It doesn't matter how long it takes the knitter or how much the knitter gets per hour.  Each knitter is a separate business.

 

But if the woman gives the yarn and a pattern to the knitter and tells them what to knit, then, it is very likely that, in the eyes of the IRS, the knitter is an employee (especially if she does the knitting at the woman's place of work).  The woman has to withhold payroll taxes (and perhaps income taxes) from the wages paid, she has to pay the employer's share of payroll taxes, she has to file quarterly payroll tax returns, and, most importantly, she has to pay them at least minimum wage.  If she has enough employees working enough hours, she may also have to offer medical insurance, and possibly vacation and sick pay.  

 

This situation isn't as cut and dry as most.  There are arguments to be made that the knitters are independent contractors, but there is also evidence that they are employees, and, in general, when the situation is ambiguous, the IRS goes with employee/employer instead of independent contractor.  

[EAG46]

I agree with all the concern over the payment to the Purlettes. I couldn't believe Kevin was the only one to talk about exploitation with both the kids and the Purlettes and everyone else shushed him. I'm sure for him it's a legal/pr thing but when the guy with no soul shows more compassion than you, maybe you should take a second look, Sharks!!

You hit it right on the head.  I normally think Kevin is the worst example of capitalism but he can show compassion when it matters.  Even if it is most likely based on legal or PR matters, it's still more than the other Sharks showed.  

[bilgistic]

I mixed my examples. I'm assuming bag lady is supplying the materials and workplace, which would theoretically make her the employer. However, if the Purlettes are working as independent contractors, they have to report the income because of how much it is, even at the paltry sum per bag. Even if they are getting paid "under the table", it's out now what they are paid. It's very nebulous, at any rate, and I suspect it's going to be very hairy in due diligence.

[sadiegirl]

That suitcase is a joke, in my opinion.  $400 for a carry on is ridiculous and all the scale in the handle does is add more weight to the suitcase.  As for the roll-top, I think it's a clever idea, but I'm not sure it is that functional.  Would be interested to hear actual user reviews.

[needschocolate]

I mixed my examples. I'm assuming bag lady is supplying the materials and workplace, which would theoretically make her the employer. However, if the Purlettes are working as independent contractors, they have to report the income because of how much it is, even at the paltry sum per bag. Even if they are getting paid "under the table", it's out now what they are paid. It's very nebulous, at any rate, and I suspect it's going to be very hairy in due diligence.

 

Very true.  

 

A CPA once told me that if a company pays someone over $600 and doesn't prepare a 1099 form, and the person who did the work doesn't report it, it is actually the company that gets in more trouble.  He said that the company could possibly be liable for the worker's taxes on the income, as well penalties for not filing. 

 

This would be hard to catch, unless the company is audited.  But once you appear on national TV you're out of luck.  

[LittleIggy]

Littleleggy, I think you mean Norma Rae.  Norma Jean was Marilyn Monroe.

Yep, you're right! :-)

[Mumbles]

Here's hoping someone from the IRS or a union organizer from UNITE (the successor to ILGWU) is a Shark Tank fan and hoists this lady on her own petard.

[basiltherat]

Just to add fuel to the fire, isn't Uber claiming its drivers are "independent contractors" and NOT employees?  They are quite a lot bigger than Perlettes!

[needschocolate]

Just to add fuel to the fire, isn't Uber claiming its drivers are "independent contractors" and NOT employees?  They are quite a lot bigger than Perlettes!

 

I can see how that would be okay.  I haven't used Uber, but it my understanding that Uber just sends information out to drivers and the drivers decide if they want the job.  I believe the driver provides their own insurance.  So Uber isn't a taxi company, it is a company that connects passengers with independent drivers.  

 

I am pretty sure if Uber was doing something wrong, the IRS would have noticed by now.  

[nobodyyoucare]

I can see how that would be okay.  I haven't used Uber, but it my understanding that Uber just sends information out to drivers and the drivers decide if they want the job.  I believe the driver provides their own insurance.  So Uber isn't a taxi company, it is a company that connects passengers with independent drivers.  

 

I am pretty sure if Uber was doing something wrong, the IRS would have noticed by now.  

The IRS is understaffed. The funding for the IRS isn't high enough to hire all the people needed to go after tax dodges. Your typical IRS in the audit dept brings in several hundred k extra from tax dodgers even after his pay etc is taken out. Yet every year more and more of those agents are not hired and the numbers shrink.

[UsernameFatigue]

I really hated the Trunkster. I didn't understand the point of the roll top - for me my stuff would just fall out as I rolled the opening down. As far as the weight scale goes, I have a portable one that works just fine. As others have said sometimes you have to take batteries out of things that you are checking. The price was ridiculous and I hate the colour black to boot (also pink though so it is not a gender thing). And even when you are carrying luggage on it can still get tossed around - I wonder how well the scale and port would stand up to being banged around?

 

I also thought the knitters in the residences were being exploited. Not to mention I find that while people in their 80s and 90s knit which each decade below that it is less and less popular. As I joked to my hubby, when the current knitters pass she may not have anyone to replace them. On top of that I like my purses to have several pockets and these looked way more basic than I would ever want in a purse.

[Jersey Guy 87]

There is a little gizmo you can buy to hold in your hand, hook your luggage onto it, and weigh every piece. As long as it's not over 70 lbs., you won't be charged extra. Unless you're hauling home some bricks in that small suitcase, you should be fine. I just cannot see paying $399 for a small carry-on suitcase.

 

For a bag that size you're not going to make it too heavy to carry on or check unless you're packing unusually heavy stuff (lead bricks, perhaps?).  $400 for a high-end rollaway bag isn't outrageous, and when I traveled a lot for business I invested in higher-end luggage because it quite simply held up better.  However, Trunkster doesn't give me the impression of high-end luggage, it gives me the impression of gimmicky luggage.  I have questions about the durability of the rolltop - both in getting punctured but more importantly in the roller track getting screwed up.  The USB charger aspect just adds weight for little value - airports have charging stations nowadays, hotel lobbies have outlets and when you're on a plane the bag is in the overhead compartment above you.  This is the type of crap that gets sold through SkyMall.

 

Do the Purlettes know that Sarah Oliver is pulling in $178 per handbag, while they're making $17?

 

They do now.

 

The trike guy didn't seem to have a plan to make an actual viable business.  He inspects every single trike?  He didn't seem to know if he should shoot for he kid market or the adult market.  His next step after the trike (which did seem cool) was to sell accessories for it.  The sharks were right to walk away.

[RemoteControlFreak]

I wouldn't be surprised to see the Purlettes thing fall out in due diligence.  I would bet $$$ that the $17/purse that Sarah pays them is under the table and without being reported properly to the IRS.  I can't see any Sharks, let alone 3 Sharks being okay with that.  If Sarah has to start reporting their income, depending on how the seniors are paying for the retirement community (especially if Medicaid is involved), the newly reported income could screw that up for them.  Something tells me she'll probably regret that deal in the end.

 

I could see the suitcase being useful to people who travel all the time.  My husband travels at least once a month and tries to fit everything into one carry-on and one laptop bag.  He loves the idea of the USB charger in the suitcase, especially for times when he doesn't check into a hotel room but still has luggage with him.  If it's built well and can last at least two years, he doesn't care about the price as much.  I really think that was Lori's (or Barbara's?) point that it really hasn't been tested by the market yet so there's no way to know what the upper-echelon traveler is going to think about the luggage.

I travel all the time and I still think it's stupid. (see above post).  Maybe because I'm not a millennial, I'm too stupid to get it. 

 

Most millennials I know can barely pay their rent let alone spend $460 for a suitcase.  

 

Your husband should look into a portable USB battery-run charger. They cost about $20 and are about the size of a cigarette lighter. And your phone isn't tethered to a freakin' suitcase while charging.

Edited December 7, 2015 by RemoteControlFreak

[A Boston Gal]

And to prove  justhow stupid it is.  Here's a photo from Trunkster's website in which Mr. Manbun dumps his entire suitcase on the top of a nice coffee table just so he can charge his iPad from a hotel lobby. 

 

From this angle, it looks like a first generation fax machine.

Edited December 7, 2015 by A Boston Gal

[Tara Ariano]

In case you missed it, here's the Previously.TV post on the episode!

 

Taking Everyone For A Ride
The first segment of Shark Tank features the Sharks riding around in circles. It's a theme that continues throughout the night.

[Yokosmom]

3. Who needs a scale on a carry-on?  It would be almost impossible to approach the weight limit with a suitcase that size.  The company's website claims that "Weight restrictions vary drastically by airline, and often even by the route."  This is simply not true. The standard domestic weight limit is 50 lbs.  or 70 lbs with elite status on some airlines.

 

Domestic, sure, but if you are one-bagging it in Europe or elsewhere, carry-on weight restrictions can vary between 10-18 pounds.  For those types of flights, I thought that the built in scale was rather cool.  That said, I'll take my semi-pricey soft luggage over that--much better organization, lighter, and easier to stuff in an overhead.  The suitcase itself looked rather heavy and the wheels can sometime be a problem on those smaller airlines.  As others have said--a luggage scale is very inexpensive as are portable rechargers.

[OpieTaylor]

Not to mention I find that while people in their 80s and 90s knit which each decade below that it is less and less popular. As I joked to my hubby, when the current knitters pass she may not have anyone to replace them. On top of that I like my purses to have several pockets and these looked way more basic than I would ever want in a purse.

I, too, felt like the knitters' very advanced ages could be a real problem. Health issues could arise quickly at any time. And some of them might just decide they don't want to knit anymore. I wonder if the owner is teaching people how to knit, so she can keep a supply of workers.

[leighdear]

I also thought the knitters in the residences were being exploited. Not to mention I find that while people in their 80s and 90s knit which each decade below that it is less and less popular. As I joked to my hubby, when the current knitters pass she may not have anyone to replace them. On top of that I like my purses to have several pockets and these looked way more basic than I would ever want in a purse.

I'm 2 generations younger, but have been knitting since I was 6.  I think now it's an exposure thing.  Like sewing or any other type art and craft, early exposure to it and a willingness to learn are they keys.   And as I mentioned upthread, one virulent flu epidemic and production can take a huge hit. 

 

As for pockets in the purse, those would be part of the lining, not the outer knitted "shell" of the bag.  And those linings are probably being custom-sewn by a small piecework company.  The handles and/or straps will come from another provider.  Lots of hands in and on these bags to bring them to market, so the price has to reflect it.  

I just don't like it in any way.  And I dislike more that watching this made me respect Kevin.  For a moment. 

[UsernameFatigue]

All of my purses have pockets both outside and inside so a knitted purse that has pockets only inside I would never buy.

 

As far as knitters go, yes of course there are people who sew/knit because they are crafty and love to create. My point was that in the case of those who are in their 80s and 90s many took it up because in 'those days' you would save money by knitting your own sweaters/scarfs/mitts/baby clothes. Also many were stay-at-home moms. With each decade below that age group many women worked outside the home and chose to spend their limited free time in other ways. In addition the cost of materials and time involved to create any knitted item is only worthwhile if it is something you enjoy in the first place. I only know one person (my sis in law who is in her mid 60s) who knits and sews - has since she was a young girl and is fabulous at it. None of her three daughters showed any interest in it though a couple are 'crafty' in other ways. But the bottom line is people do it now because they enjoy it, not because it is a money saver for the most part.

[marny]

 

 

As for pockets in the purse, those would be part of the lining, not the outer knitted "shell" of the bag.  And those linings are probably being custom-sewn by a small piecework company.  The handles and/or straps will come from another provider.  Lots of hands in and on these bags to bring them to market, so the price has to reflect it.  

 

 

But yet the business owner claimed her total cost to make each bag was $47.  So either there are other workers (besides the Purlettes) being paid a pittance, or the bags don't have additional features like lining pockets.

[leighdear]

The website gives a great deal of information about the bags....

http://saraholiverhandbags.com/

They have features and embellishments that speak to a significant finishing cost.  You can also see that the prices of the different bags vary considerably.  I don't know that $17 per bag is what she is paying for all the different styles.    

 

I found her presentation confusing, the questions by the sharks were confusing and her entire business model is unclear.  It seemed to me that everybody got so caught up in the emotional feels that clarifying questions were either edited out or bypassed entirely.  

[MoreCoffeePlease]

 

The tricycle guy should charge $1200 and keep personally inspecting those bikes as a niche product for rich people. He's young, but he needs to grow a thicker shell re saying the sharks were rude.

 

My entire family looked at each other when he said they were rude and said, "Have you NOT seen this show?!?"  The talking over each other, both sharks and presenters was beyond annoying during this episode, especially with the Trunkster dudes. 

[Eolivet]

Since everyone else has covered the exploitation issues about the handbags, I will say: $225 for a purse made of wool from a woman no one has ever heard of?! Personally, if I'm paying $225 for a purse, I want designer. And leather.

 

(When she first started talking and she said $47, I was like "That's reasonable" and then I realized that was her cost, not the product. Oops...)

[leighdear]

As an update, the Sarah Oliver bag site answered my email regarding the purses being lined, and they said there is NO lining in any of the purses.  However, there is thin fabric base in the bottom.  I assumed it's just glued in, but they didn't specify. 

 

So eliminating a lining in the bags drops her cost and bumps up her profit.  Interesting.  I'd really like to see one of these bags, but the closest retail shop to me is over an hour away.  

[Mumbles]

The bag sounds like crap. I'm surprised a non-leather unlined bag is selling for over $200. I think the "appeal" of such a bag, and the reason any of them are bought, is the fact that the Purlettes are knitting them (she makes a big point of including a little bio slip of the particular Purlettes knitting the bag). All the more reason to fairly compensate them!

It's great that the Purlettes are having fun knitting. Absent getting paid fairly, I suggest that they quit their sweatshop and all meet to knit blankets or socks for folks in shelters.

[bilgistic]

My mother (66) was making hats for premature babies at one of her local hospitals for a while. I guess the standard-issue hats don't fit premature babies' heads. I'm almost positive it was a volunteer thing. There are definitely other fulfilling things to do than make a paltry $17 a bag. I'm still mad about that, and hope the bag lady was made to pay a fair wage.