i'm going to say, this is the coolest fricking thing i've ever seen. ...an avid fisherman has spent years inventing his own cutting-edge gear... ethan: there's never been one in the world. like, this is the first one. lemonis: ...garnering attention across the world... ethan: australia wants to do, like, 500 of 'em. lemonis: ...and generating almost half-a-million dollars in sales. fricking awesome. and i think he can do 10 times as much. ethan: i think we can really sell the pants off of this. marcos: i think it's going to be very interesting. lemonis: but only if he'd listen to feedback. you don't tend to hear the negatives. ethan: i get defensive. lemonis: ethan smith is rightly proud of what he's created. ethan: we're doing it better than other people. we've had 100 million views on facebook of this. lemonis: but his products, well, they need refinement. bruce: nothing fits right now. we need to tweak it. lemonis: his sales pitch definitely needs work.

i think you guys have done a [bleep] job explaining to them why they need to own it. and his business plan needs a reality check. i think your numbers are obscenely wrong. if i can't get him to loosen up and work on collaborating... ethan: i think there were a lot of people that were saying the same thing about a car, when henry ford came out with the car. they were happy with the horse-drawn carriages, but i think that, you know, long-term, worked out in a different way. lemonis: ...this company may be up a creek without a paddle. we've got a deal? ethan: uh... uh, well, i, the... um... 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." ♪

[ train whistle blows ] i'm heavily invested in the outdoor space with companies like camping world and gander outdoors. and so when the company reached out for help and i went online and did a little research, i was intrigued because there were products that i had never seen before. there's a level of technical ingenuity that you just don't find in most outdoor products. and if i can figure out a way to strike a deal and get access to distribute these products, it could be a win-win for everybody. ethan: hello. lemonis: hey, how are you? lemonis: pretty good. how are you? lemonis: i'm good. i'm marcus. ethan: yeah, welcome. nice to see you. lemonis: what is your name? ethan: i'm ethan. lemonis: ethan, nice to meet you. this is cool. ethan: yeah. lemonis: so, smithfly, tell me a little bit about the company. are you a fly fisherman? ethan: oh, yeah. and i was just frustrated with what was on the market at the time. i started doing some of my own design work. so, this was the core product line, which is based on kind of the military concept of modular packs and bags. like, this is molle webbing, which stands for modular lightweight, load-bearing equipment. you can mount multiple pouches, too.

i sort of introduced it to the fly fishing side of things. so, like, i brought it to them. lemonis: so, what is this bag used for? ethan: uh, so, it holds tippets, spools, and like, fly boxes and kind of everything you need to be on the water to fish. lemonis: this is for fly fishing. ethan: mm-hmm. yep. lemonis: and are these straps right here? ethan: those are for, like, a belt. but the cool part is, straps mount to here or a padded like waist belt that you can mount multiple patches to. so, the idea is people can build their own packs. lemonis: this is awesome. ethan: yeah. lemonis: what's really cool about ethan's designs is that the user can actually customize exactly how they're going to use his products, and it's almost like legos for an outdoorsman, where they can bolt on different things or strap them on. it's kind of fascinating. what did you do before this? ethan: uh, i was in retail design. we actually did the original gander mountain design, like, believe it or not, like... lemonis: the inside of the store? ethan: yeah, the whole retail design was like, our package. lemonis: did you design all this, as well? ethan: yeah. and the interesting part about this is, these little laser-cut slits is a pretty unique feature that i designed. lemonis: is it ventilation? ethan: no, it's actually for my pouches. lemonis: so, all these slats have a purpose. ethan: right. and there's nobody else that makes this.

lemonis: this stuff is fricking awesome. it's more of a tool than it is a jacket. but feels a little big. ethan: i've always said that like, i'm not really in the fashion business, i'm like an industrial designer. function comes first for me a lot of times, so like, in the industry, i've gotten a lot of critiques from the soft goods side that say my stuff's a little drab. but i'm like, "hey, you know, like, there's -- the people who get it, get it." lemonis: i thought it was odd that ethan got really defensive over something as simple as me commenting that the product that i just put on was a little big. i wasn't criticizing the product. what's the name of the boat? ethan: the big shoals raft. shoals means, you know, shallow water, and big means big. so, it's a big thing that you can put on really shallow water. we're doing it better than other people 'cause it weighs 125 pounds, so two guys can pick it up and carry it to water. and we use materials that are really, really good. so, the competition's making stuff in china, and we're using really thick-walled aluminum, doing all the bending and welding in-house, solid one-piece welded frame. and that's what people love about it, is its stability, the lightweightness. lemonis: this. ethan: yeah. lemonis: and then, what's this? ethan: that's the same boat, just different color. it fits in the back of a pickup truck.

lemonis: what does this cost to make? ethan: 1,500 bucks. lemonis: and what are you selling it direct-to-consumer for? ethan: right now, we're at $3,848, is the msrp. lemonis: that's a pretty good margin. ethan: it's okay. that includes 500 bucks for shipping. lemonis: mmm. ethan: 'cause then the people -- i know. and it's like, logistics on these things have been a fricking nightmare. lemonis: here's the problem, right. we have the same problem in the rv business. people are going to shop the price, and if you bury it in the price, your competitors are going to prey on that. in today's competitive e-commerce environment, consumers are going to start by shopping on price. ethan gives himself an immediate disadvantage by the way he presents the price to the consumer. because the competition is going to sell the product, then they're going to add shipping and whatever other costs are associated with that. right out of the gates on a comparative basis, he loses. i mean, honestly, i would buy one of these, and i don't -- i don't even know what i would do with it. ethan: you'd have a lot of fun. lemonis: i'd probably put it in my pool or something. how did this come to be? ethan: it's pretty cool, isn't it? i said, "how about we merge the raft and the tent?"

it's a big thing that you can put on really shallow water. lemonis: i'm going to say, this is the coolest fricking thing i've ever seen. ethan: we've had 100 million views on facebook of this. there's never been one in the world. like, this is the first one. lemonis: i think there's things that you can still add to it. ethan: we just tell everybody like, when they buy this, you have to know and understand your safety regulations. so you've got to have life jackets, you've got to have an anchor, you've got to have paddles, you know, you've got to have backup paddles -- lemonis: and you have all that? ethan: no, we don't sell that -- lemonis: you should sell all of it. ethan: oh, i know. lemonis: how many have you sold of these? ethan: 50. 50 or 60. i can't -- i've lost track right now. lemonis: and what does it cost to make this, fully set up? ethan: it's about 500 bucks and it sells for $1,499. lemonis: dude? that price needs to go... ethan: up, you think? lemonis: yes! ethan: i'm -- i'm with you. i'm just not that hard-ass, and i need to be more. lemonis: i'll -- i'll be the hard ass. ethan: that's why you're here. lemonis: have you ever been to an event where you go into this booth and there's wind and there's cash moving around? ethan: oh, yeah. lemonis: that's what this thing is. okay? this thing is a giant cash machine. ethan: oh. well, i'm glad you think so, too. lemonis: how do i get from point a to point b?

ethan: we build a trailer that'll hold this and the tent. lemonis: how do you sell today, direct-to-consumer? ethan: pretty much. yep. lemonis: online? ethan: yep. everything's ready to go. we just have to be caught up on production, which we've never been able to get, 'cause i can't float all that money out there. lemonis: are all of your inventory issues exclusively related to working capital? ethan: almost entirely. lemonis: who's handling, like, the ordering overseas? raw materials, picking the colors, coming up with new ideas? so, there's no help? ethan: jules. like, it's me and jules. jules: hi. lemonis: and, jules, what is your role here? jules: to do whatever ethan asks me to do. lemonis: you do the accounting? jules: i do. ethan: the office manager, admin kind of position. jules: and i really wanted to work here. so, i took guiding trips and learned to fly fish and -- lemonis: just for this job? jules: just for this job. but i totally believe in what he's got here, and there's so many opportunities that we miss. we have rafts that are back ordered right now. and we lost sales on the tent because we couldn't fulfill the orders. lemonis: and you didn't have them in stock because you didn't have the working capital to actually put them in stock, right? jules: right. lemonis: if you don't have

excess working capital, it could be just as detrimental to a business that has too much inventory. it's like everything just gets locked. ethan: oh, yeah, stuff gets pretty tight and scary. lemonis: and what about where they would all get stored? like, if you had half-a-million dollars in cash, you could buy inventory, where would it go? ethan: i've got a huge basement that i can store stuff in, and i do have like -- but like, we're working on buying the building across the street. lemonis: how big is it? ethan: it's 55,000-square-feet. lemonis: i'm not sure i understand what ethan's business logic is, of wanting to buy a 55,000-square-foot building to store inventory that he doesn't even have, and furthermore, he's got a building that has a basement. jules: when i started last year, it was ethan and his dad and his father-in-law. lemonis: oh, your dad works here, too? ethan: uh, he did for awhile, yeah. my mom kind of got sick again, and so he's been taking a break for a little while. lemonis: your mom okay? ethan: yeah. yeah, yeah. well, actually, the day i quit my last job to start this, she got diagnosed with stage 4 lung cancer. lemonis: oh, man, i'm sorry. ethan: yeah. and, um, yeah, so, sh-- um, it was the same day i left my job.

but, like, they think there's lots of options, still. she's still got a lot of life in -- lemonis: how's she doing now? ethan: actually, she's doing pretty well. so, anyway, he's -- he's kind of taking a little bit of a break. but then we've got some new guys in from the welding school that are absolutely top-notch, like, world-class welder. ♪ lemonis: so, what, are these the frames? ethan: yeah, these are the frames that are raw before they go across the street for powder coat. lemonis: so, what does that frame cost? ethan: probably 750 bucks. lemonis: your boat costs about $1,500 to make today, and the frame is half of it, at $750? ethan: right. lemonis: hey, ethan, i'm going to spend a minute with jules, without you, if that's all right? what do you ultimately want to do here? jules: me? lemonis: yeah, you. jules: i personally think i would be awesome at the sales. lemonis: you do? jules: i'm passionate about the products. when people call and i get the call, not ethan, i can sell the boat just like ethan can. lemonis: any time i meet somebody that's raising their hand saying,

"i want to be part of the sales organization," tells me that they believe in the product and they want to be part of the future of it. thank you for chatting. jules: oh, no, of course. lemonis: see you in a little bit, okay? jules: yes. ethan: okay, so this is one of the trailers. lemonis: is it pretty sturdy? ethan: yeah, you can climb up there. lemonis: yeah. the trailer looks janky. ethan: janky? lemonis: see like, there's a lot of sharp edges on this. but you can tell it's -- it's homemade. 'cause you just need somebody that does mass welding. i give ethan a lot of credit that he's thinking outside the box, looking for additional products to add to the company. and while that may happen in the future, it's probably better for him to outsource some of those things and focus on making the core products that he has perfect. where's our tent? blow that bad boy up. ethan: comes already set up. lemonis: hold on, i'm going to time this, 'cause that's important. okay. [ air pump whirring ] [ whirring stops ] ethan: what happened? jules: i don't know. lemonis: fuse? ethan: blew a fuse.

lemonis: try again. so, if i'm spending how many thousands? ethan: $1,500. lemonis: $1,500. you've got to just remember that this changes the experience for somebody. they're like, "what the...?" ethan: yep. lemonis: if you weren't by a car, what would you do? ♪ big problem to solve. jules: mm-hmm. lemonis: huge. ethan: i can go get the other pump, and we can be pumping both at the same time. lemonis: yes, please. jules: [ laughs ] where are we? lemonis: 22 minutes. ethan: it's coming alive. lemonis: ready? ethan: yep. lemonis: turn sideways, ethan. ethan: it's easier to paddle from the side. lemonis: this thing is awesome. ethan: thank you. there's an airbnb for nature in australia that wants to do, like, 500 of 'em. lemonis: the fact that ethan has demand from a place

as far away as australia tells me that there's an international play here. ethan: high-five. lemonis: what's to say that people in south america or in europe may not have the same interest? ethan: we wouldn't be able to do this with a real, you know, heavy jon boat or something like that with a big motor on it. lemonis: i still think you could figure out how to take weight out of it. ethan: uh, no, you can't. lemonis: couple comments on the seat. it is flimsy. ethan: don't lean back like that. lemonis: and it's a little -- yeah, but you need to be -- you've got to think that somebody's going to want to. ethan: pull it up, pull it up. lemonis: am i holding my hand right? ethan: yep. and then just throw the line back. it's really a stop at 10:00 and 2:00 is what they say, so it's 10:00 on the clock face. lemonis: stop. ethan: yep. a lot longer on that back half. lemonis: i feel like i fly fish very well. you didn't see my wrist, how about it? my outfit was right, i was good. where do you think the business can get in the next five years? ethan: i've got a plan that i think we could do $20 million in revenue. we're not there now. like, this year's break-even. we lost money last two years in a row, so... lemonis: you did? how much did you lose?

ethan: last year, i think, 68 grand. lemonis: and how are you funding that loss? ethan: with duct tape and bailing twine. no. lines of credit. like, i've just not paid myself at all. but yeah, i mean, i think with the right scale and the right partners, you know, we could get to $10 million, $20 million a year in revenue, i mean -- lemonis: okay. well, why don't we go back, let's dig into the financials, and let's see if we can do something. ethan: okay. yeah, yeah, absolutely. [ train whistle blows ] ♪ lemonis: how are you, buddy? ethan: good. how are you? lemonis: everything good? ethan: yeah, yeah, have a seat. lemonis: yeah. ethan: it's great. lemonis: so, did you bring your financial statements? ethan: uh-huh. i don't know what we want to start with or whatever, but... lemonis: let's start with the pnl. ethan: okay. lemonis: what year is this? ethan: these are just vendors. this is this year. these are sales, raft sales here. lemonis: $238,000. ethan: and then there's shoal tent sales here, was $70,000. lemonis: so, the business, you think you'll do $400,000 for the year? ethan: yeah.

lemonis: $400,000 a year, plus or minus some revenue. what was your revenue last year? ethan: about $250,000. and about $150,000 the year before that. lemonis: $150,000 of revenue you lost. ethan: $48,000. lemonis: 2017. ethan: $68,000. lemonis: $68,000. and this year, you'll probably do around $400,000. ethan: we could be close to breaking even. lemonis: how much debt do you have today? ethan: $240,000. there's a sheet over here with that. lemonis: liabilities, $36,000 in payables, which are just your vendors. ethan: mm-hmm. lemonis: and $238,000 in loans. ethan: mm-hmm. lemonis: you own 100% of the business today? ethan: mm-hmm. lemonis: i like the product, i like the way it was made. i like the fact that a lot of the parts and pieces are made here. i like the fact that you think about the functionality of it. and so, i'd like to make an offer to invest in you and invest in the business. my offer would be $1 million for 50% of the business. we've got a deal? ethan: uh... uh, well, i, the...

so, um... baker: when i think party raft, i think of, how do you put a cooler in it, how do you put cup holders in it? ethan: and we got 100 million views of it, right? it's a unique product. chris: it's a tough sell. bruce: yeah. lemonis: i think you guys have done a [bleep] job explaining to them why they need to own it. lemonis: we've got a deal? ethan: uh... thanks for the ride-along, captain! i've never been in one of these before,

even though geico has been- ohhh. ooh ohh here we go, here we go. you got cut off there, what were you saying? oooo. oh no no. maybe that geico has been proudly serving the military for over 75 years? is that what you wanted to say? mhmmm. i have to say, you seemed a lot chattier on tv. geico. proudly serving the military for over 75 years. you ok back there, buddy? well you can always i thibring it backy it. within seven days for a full refund for any reason. like, if i become allergic to yellow? sure. or my turtle hates it? okay. that is good to know because reggie is very opinionated. i'm sure he is. this melting pot of impacted species. everywhere is going to get touched by climate change.

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uh, well, i, the... so, um... we've got a deal, yeah. lemonis: i'm excited. ethan: i am, too. it'll -- it'll be good. lemonis: all right, my man. ethan: awesome, man. we had fun. lemonis: okay, my man. i'll see you soon. ethan: thanks. lemonis: thank you. ♪ welcome to kenosha! in order to hit the ground running, i brought ethan and jules to my gander outdoors store in wisconsin. what i ultimately wanted to find out is, do the people that work at the stores and the people that shop at the stores actually like the products? what are the things they think could be better, and what do they think would sell right away? ethan: the frame we make in-house. it's all one piece, so it's never going to creak or squeak or get loose. chris: the seat would worry me a little bit. ethan: but they are the lightest seat on the market. bruce: if the seat breaks, you kind of lose a little bit of credibility with the quality of the boat.

you've got to get the seat right. lemonis: chris, does it need to have a trailer? ethan: inflated, it fits in the back of a pickup truck. lemonis: okay. but not everybody has a -- ethan: oh, right, right. bruce: it'd have to be a pickup. lemonis: well, let's -- let's take it a step further. what's our primary business? so, how is this transporting in an rv? that frame's not fitting in there. ethan: no. chris: you'd still have to break it, side-to-side. lemonis: we're going to need a frame that is a collapsible frame as an option. bruce: nothing fits right now, so you're really limiting yourself to only be a toy hauler owner that can take the boat. we need to tweak it, we need to get it right. lemonis: what do you think of the brand name, smithfly? chris: in this, it makes me think about fly fishing. i mean, you might pigeon hole. would definitely, you know, see it as a fly fishing application. i notice everything's green, green and black. is there different colors? you've got... ethan: we don't do a ton of different colors right now. i mean, it's pretty drab. fly fisherman are pretty boring. chris: could you see it as a hunting application? could you see it as camo? ethan: no. this is the jacket we've probably sold the most of,

but it's, uh, for fly fishermen. lemonis: i understand that ethan cut his teeth on fly fishing, but in order for the company to truly grow, he has to change his thinking. let's get away from singularly fly fishing, and let's think much broader. so, i thought it'd be a good idea to maybe let jules take this one. lemonis: what did you say to me when we were together? jules: i would like to sell this thing. sales? lemonis: there we go. perfect. let's go. so, here's your audience. jules: okay. well, this is our shoal tent. uh, evolution of the shoal tent was really, um, sort of very quick. so, what we have here is, uh, the initial, uh, model, but we'd like to improve it. um, i would ask you to step inside, 'cause i think that's one of the biggest selling points, is really seeing that hard-stitch floor. we can take sides off. if you're the owner, you're going to learn very quickly that one panel at a time probably makes it a little bit easier.

bruce: does it come with a pump? jules: it comes with a foot pump. bruce: a foot pump. okay. baker: for $1,500, it needs to come with a real pump. ethan: i mean, it's a piece of electronics that you're putting in a water boat that like, you know, it's a point of failure that, like, we might be introducing. chris: does it come with any type of anchors? ethan: it does not currently come with anchors. you know, anchors are pretty specific to what water type you're on. baker: the other thing i was thinking was, it's a party raft. so when i think party raft, i think of, how do you put a cooler in it, how do you put cup holders in it? it has speakers? yes or no? ethan: no. we got 100 million views of it, right? it's a unique product. chris: it's a tough sell. bruce: yeah. ethan: i think there were a lot of people that were saying the same thing about a car, when henry ford came out with the car. they were happy with the, you know, horse-drawn carriages, but i think that, you know, long-term, worked out in a different way. lemonis: i'm a little surprised how ethan's handling the feedback from people who potentially could sell his product. instead of him being open-minded and just taking it and processing it, he gets a little snarky and sarcastic,

which is a little embarrassing for me, to be honest. lemonis: i think you guys have done a [bleep] job explaining to them why they need to own it. tomorrow morning, we're going to work on some products, i want to work on some ideas, so i hope you have a sketch pad of some kind. ethan: i don't generally -- lemonis: you don't? jules: we do. we have a sketch pad. we'll get it. all right. lemonis: i didn't feel like ethan really accepted the criticism very well yesterday when we were at gander. so, in order to make sure that he truly understands where i want him to go, we're going to meet again today so that there's no confusion on what my expectations are. what did you guys hear? 'cause i know what i heard, and so, for me, i want to understand how well you processed the feedback. ethan: i think we got, you know, compliments on the size of it and the height of it. it's got a lot of room in it. so, i heard that a lot. i didn't hear a lot of the negatives, though, and i don't know what changes they really suggested. like, i don't know. um, as far as -- i do? lemonis: no, don't help him. because this is why i think it's best

that you and i found each other. because you hear the positives, as you should, 'cause you should get recognition for the solid work that you did. but you don't tend to hear the negatives... ethan: right. lemonis: ...either because you don't want to or because -- ethan: i get defensive. lemonis: or you don't agree. and typically when people get feedback and they don't agree with it... ethan: yeah. lemonis: so, we both heard things. what did -- you heard nothing? ethan: i mean, i -- i, yeah, i guess i just don't remember any of the negatives, so just like, like you said, just kind of... it's 55,000-square-feet. there were some epa issues. somebody poured some chemicals out back here. so, they just need to dig out some dirt. it's just, the bill was going to be, you know, $2 million. so, we've actually come to a -- well, yeah.

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with the capital one savor card ♪ you earn 4% cash back on dining and 4% on entertainment. so when you go out, you cash in. what's in your wallet? ♪ well you can always i thibring it backy it. within seven days for a full refund for any reason. like, if i become allergic to yellow? sure. or my turtle hates it? okay. that is good to know because reggie is very opinionated. i'm sure he is. what did -- you heard nothing? ethan: yeah, i guess i just don't remember any of the negatives. lemonis: it's a bit bizarre to me that ethan literally has zero recollection about the feedback that he just received yesterday. and it's either because he's basically tuning everybody out

because he doesn't want to hear it, or he's not processing it because he doesn't agree with it. but in either case, not acceptable. can i just borrow this for a minute? jules: sure. lemonis: this has an interesting look to it. ethan: uh-huh. lemonis: these are a lot of feedback notes. this is listening. ethan: mm-hmm. lemonis: this is the difference. and so, ethan, i wanted to give you a little feedback last night of what i got from the team. two comments. one, everybody wanted a camo pattern. it has to exist. the other comment was, what accessories exist, and what accessories can be developed for different categories. and they said that they probably could double or triple the sales if the name was different. ethan: oh, i've actually gotten quite a few compliments from the industry just because smith has the whole, making things with your hands, sort of metal working background. like, that's, you know -- that's my family. lemonis: according to them, you could potentially lose somebody -- jules: the fly part. ethan: right. lemonis: what they want to do, is they want to order all of this for spring. they just want it to be smith.

i would be thinking about name alternatives. ideally, you would land on one thing that can be merged everywhere so you don't have to have multiple skews. ethan: yeah. lemonis: if ethan's company ever has a chance of being successful, he has to understand that he's going to have to accommodate the feedback that he's getting or they're not going to buy the product. and if they do buy it, they're not going to be excited about selling it. but don't think negative. ethan: yeah, yeah. lemonis: constructive criticism is constructive, meaning that it makes things... ...better. i'll see you guys in a couple weeks, okay? jules: yep. lemonis: i'll see you in a couple weeks. jules: thank you so much. lemonis: thanks, guys. ♪ ethan wanted to show me the building that he's contemplating purchasing, and so we're going to head over, and i'll take a look with him. is this the building? ethan: this is the building, yep. lemonis: wow. the building's huge. ethan: it's 55,000-square-feet. there were some epa issues. 40 or 50 years ago, we don't really know when, somebody poured some chemicals out back here. so they just need to dig out some dirt and then put fresh dirt in it.

it's just, the bill was going to be, you know, $2 million. so, we've actually come to a -- well, yeah. but if we do the work ourselves, it can cost a lot less. so, we can probably get it down by a factor of 10, to maybe $200,000 or $300,000. lemonis: i don't like the fact that ethan's like, "oh, it's only $200,000 or $300,000," as if there was just money flowing everywhere. and that's just for the outside of the building, which makes me wonder what the inside of the building's going to look like. holy moses. ethan: he rented this out to a guy who stores like, stuff to flip on craigslist and whatnot. lemonis: are you seeing what i'm seeing? jules: oh, yeah. there's some good stuff in here, too. ethan: yeah. this is just the tip of the iceberg. so, you have to kind of look beyond all this stuff. this is all junk, basically. like, all of this is what we'd clean out and occupy. and then all these windows replaced, everything cleaned up. like, this is kind of the admin space up here. and the sewing section would kind of either be out here on the... i knew you'd be overwhelmed, but we haven't seen upstairs yet. lemonis: okay. um... ethan: so, this, you put a railing around it,

and it's the patio lunchroom. like, there's third floor is right here -- lemonis: is he serious, or is he just messing with me? jules: oh, no, he's serious. ethan: i'm not messing with ya. come up here. so, when we're a $100 million business, the final build-out has that third floor on it, right. now, i mean, how much does it cost to build this out? another million dollars. but then we've got a $13 million building instead of a -- a $5 million of a $3 million. lemonis: why would i want to put $1 million or $2 million in a dilapidated building when i could put $1 million or $2 million in product innovation and inventory and actually sell it and make margin? this is a really simple lesson for most business owners called capital allocation. and capital allocation is a term that a business would use to determine where it is that they want to spend their money. if they have a finite amount of capital, they have to really prioritize where they think that capital is going to get the company the best return on investment. in the case of smithfly, it's product innovation and inventory that the market's going to sell, not warehousing and stockpiling stuff. he's almost trying to be too big, too fast.

baby steps here. i love the fact that it's here, though. that's awesome. ethan: yeah, it's right there. lemonis: it probably would only take six years to get all this stuff out of here. ethan: [ laughs ] lemonis: now that i've slammed on the brakes of building this massive corporate campus, ethan is buckling down and working on ways to upgrade the shoal tent. jules: so, the little shoals is a two-man, uh, raft, but the big shoals holds three, as well as the great big shoals. lemonis: meanwhile, jules is working on sales, focusing on the core products that they already carry... jules: thanks for calling, and we look forward to working with you. lemonis: ...so that ethan can focus on upgrading and developing new products, things that could bolt on to tents and improvements to the current apparel products. i'm looking forward to seeing how everything turns out. ♪ ethan told me that he finished the branding changes

and the product modifications based on the feedback he got from gander. i would be lying if i wasn't telling you that i was nervous to see if he actually did it. this looks different. what did you do differently here? ethan: so, this is, like, the new frame, so it'll break down and go in the bottom of an rv. so, this is kind of the prototype of it, so it's not done-done. but basically, it's an erector set and everything comes apart. lemonis: this seat looks different. ethan: yes, the upgraded seat we've been doing. lemonis: ooh, the seat's a lot sturdier. honestly, the fact that you got it done that quick is a testament to how you move. ethan: so, the tent was one of the hot topics that we talked a lot about, right? lemonis: yeah. ethan: so, basically, you know, we talked a lot about color, so i think we can do some cool color toppers, right? we can make something work there. we've got the interior light kit kind of concept. lemonis: all led? ethan: mm-hmm. yep. this is our inflatable drink and cooler caddy that we talked about. lemonis: this is exactly why i took a chance on ethan. you can tell that his technical knowledge really, really got implemented here, and he also used the feedback. i feel like we're making real progress with him. ethan: so, on the way back from kenosha,

jules and i racked up a list of potential add-ons to the word smith. we kind of did some explorations around color and logos. i really like the camp thing. i think that turned out really well. we just came up with what symbolizes each thing. lemonis: love the fact that you put a lot of thought into it. and i think it's important that the customer understand every product they buy from this company has a lot of technical thought behind it. it's where technical thought meets adventure. ethan: i love it. lemonis: so, i would start to say let's build the 500 rafts, and i would say, give 'em to me as fast as you can. ethan: but then we need the building across the street. lemonis: enough with the building. i thought we had already dealt with this. i am concerned about the building. i told you how i felt about it. ethan: i mean, from an equity standpoint, if you can have a piece of property that could potentially be worth $5 million, people, banks, especially, they like to have collateral. lemonis: why do you need a bank to have -- ethan: well, we don't now 'cause you're here. that's -- well -- i mean, what i'm saying is, i see it as this potential that we could grow into.

we could spend 20 years there and still have a great business. $100 million business could be operating out of there. lemonis: but how do you know that? you don't have any numbers to support it. jules: we have been predominantly fly fishing, so the name is smithfly. do you think that would be a problem? kurt: i don't think you should wrap yourself into one market segment. actually, that's my buick. your buick doesn't have a roof rack! this is my buick. how are we gonna fit in your mom's buick? easy. i like that new buick. me too. i was actually talking about that buick. i knew that. did you? buick's fresh new lineup is full of surprises. during buick's fourth of july sales event, pay no interest for 76 months on most 2019 buick models.

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that we could grow into. we could spend 20 years there and still have a great business. $100 million business could be operating out of there. lemonis: but how do you know that? you don't have any numbers to support it. you also could have $100 million business in this building right here. i don't want you to think i'm saying, "no dreams and no growth." i'm just saying, "can we just sell a jacket first?" ethan: [ laughs ] that's a great place to start. lemonis: because you got an order, and you had actually to return somebody's money. ethan: right. lemonis: let's solve that problem. i need ethan to understand that designing new products, selling products, finding new customers, these basic small problems, if they're solved, will lead you to become a big business. you don't do those things, you're out of business. its necessity to make smithfly successful is where i'm having a hard time connecting that dot. ethan: i mean, i think you're right. i agree. lemonis: sound good? jules: sounds great. lemonis: you feel okay? ethan: yeah.

lemonis: ethan is concerned about needing more space as the business continues to grow, but in order to accommodate that growth, you don't have to actually just get bigger yourself, you can find strategic partners you can get help from. and so, i'm taking them to miami to rocket trailers, a company that understands the marine space and, quite frankly, can build any trailer for any size product. mario: whatever you want custom, you can get done. ethan: uh, well, for me and what, you know, i like to do, is just innovate and change things quickly and work on things, like, right there. mario: instead of doing things and messing up and doing 'em over again, we'll do the messing up and you'll get the product you want. mike: which allows you to work on your innovation. leave the trailer manufactures to the trailer people. lemonis: how much did the trailer that you make at home in ohio weigh, and what does it cost? ethan: it weighs about 400 pounds, and it costs us about 2,000 bucks. lemonis: to make. ethan: to make, yeah. lemonis: what does this weigh? frank: this one weighs

around 4 1/4. lemonis: okay. so, pretty close. ethan: pretty close, yep. frank: and then the retail price in this one is $1,395. lemonis: the retail price? ethan: yeah. lemonis: so, what would you sell this to a dealer for? frank: a dealer, we sell it at 10% off. lemonis: it's half the price. ethan: yeah. lemonis: you can see that the quality of the rocket trailers is infinitely better than what ethan was doing. and that's no criticism of him. it's just not his core competency. if you think this is a good quality... ethan: yeah, i think it matches, and it's what we're looking for. lemonis: it matches your brand. ethan: yeah, yeah, i think so. i think it's a good fit. ♪ lemonis: hi, guys. nice to see you again, brother. how are you? ethan: how you doing? lemonis: this is ethan and jules. ethan and jules keep telling me that there's a lot of international demand for this product. and it's not that i don't believe them, but i want to validate that. so, i'm taking them to cala marine. it's a distributor that focuses on most of south america, latin america, and the islands. and i want to hear their feedback if jules and ethan

are actually on the right path. jules: okay. so, one of the things that has made this the raft that everyone wants is the weight. it's super-light. the bottom has little holes so that the water self-bails. ethan: and it floats in next-to-no water, so we're talking inches of water. ethan: we did a version of it that we're calling the palapa raft. mike: what's the weight capacity? ethan: we say about 1,200 pounds, but the hull design should float more like 4,000. jules: it's the same class as the raft, so it's super-durable. mike: what's the weight on it? ethan: uh, it's about 75, 80 pounds right now. mike: that's heavy. kurt: if you could lighten this up for emergency response market by using a thinner fabric. ethan: thinner fabric, smaller tubes all the way around. that'd be cool. lemonis: all-in-all, you guys think this is a decent idea? all: yeah. lemonis: the two of them are doing an infinitely better job of presenting the company and its products than they did back at gander. i feel like jules feels more comfortable in her environment, and ethan is allowing people to give feedback, and he's not defensive every time they say something.

ethan: this is our rain jacket that we developed that has laser-cut panels up here that allow you to put whatever tools you're going to use. i think we can really sell the pants off of those. marcos: i was going to say, chile, i think it's going to be very interesting. ethan: mm-hmm. marcos: you guys planning to have a catalog with full line of products and everything else? lemonis: when will we see that? jules: well, i would say that we -- we haven't moved ahead on some of these things, just because of name, you know, looking at... ethan: just finalizing things, final-final. jules: ...you know, what that's going to be. lemonis: did you guys just hear ethan and jules tell the team at cala that the name hasn't been finalized, because, in my mind, it has. if jules and ethan aren't fully sold on this umbrella name change idea, it probably would've been a good idea for them to bring that up outside of this environment. jules: we have been predominantly fly fishing, so the name is smithfly. you think that would be, um, a problem to keep as smithfly on products? would that be confusing? rob: as far as like, in the islands, there's not much fly fishing going on. lionel: fly fishing in the fishing market, it's a small, small market.

we talking maybe 3%. kurt: i don't think you should wrap yourself into one market segment. lemonis: if your business is in trouble and you and need my help, log on to theprofitcasting.com. has been excellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're

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this melting pot of impacted species. everywhere is going to get touched by climate change. it's a small, small market. we talking maybe 3%. kurt: i don't think you should wrap yourself

into one market segment. lemonis: i don't want to alienate hunters or regular fishermen. so, they went back to the drawing board, and they came up with different ways for his company to exist. these are the name options. you'll see one of them is smithfly. what we said is, "let's call the holding company something different," and you would have these different -- rob: right, different brands. lemonis: you would have smithfly, smithgear, smithwater. rob: i saw smithtech, which i liked, because it's telling people that this is not only a technical, but an innovative company. lemonis: we'll come back to you with the catalog, hoping that you guys can rep us in that part of the world. well, guys, thank you so much. ralph: thank you, marc. lemonis: thanks, ralph. thank you, sir. luckily, we were able to get everybody's head right about it. but what i don't like is surprises like that, especially in front of a potential distributor. so, the part that i didn't think went well, was your comment about, "we're waiting to figure out the branding." jules: okay. lemonis: okay. when i left last time, i thought, "hey, we're all in lockstep," but it sounds like

the three of us are not in lockstep about it. jules: we've already made the name as smithfly, so people know us for all of these things. lemonis: the business that brought you to the dance, smithfly, is not going away. it's just inviting other people to the party. ethan: it's not necessarily a terrible idea. it's good. lemonis: it's good that it's not terrible. i set up a meeting for the end of this month. and we're going to go the headquarters for realtree. we want to create a licensing relationship with them, where we have the rights to use their very popular prints and fabrics across the boats, the tents, the apparel, and we're going to let jules take the lead. so, let's get prepared for that. jules: okay. ethan: sounds good. lemonis: all right. talk to you later. ethan: yep. lemonis: thanks, guys. ♪ realtree is the company that specializes in camo prints for the outdoor lifestyle. it's almost like getting the good housekeeping

seal of approval on one of your products. let's go! jules: oh, look what he's got on! lemonis: we're ready! ethan: hey, look at that! jules: hey, nice. lemonis: we're here on a pitch. we've got to be dressed with our stuff, right? if the camo print is part of or connected to that product and it has realtree on it, retailers almost see that as a big check to put it in their stores. so, what do you guys have set up here? jules: yeah, so we brought a little bit of -- of everything. lemonis: so, what is this print? jules: that is a realtree knock-off. ethan: no, it's -- that's the real deal. yeah. jules: oh, it is. lemonis: this is recent, just made. ethan: mm-hmm. pretty recently. lemonis: it looks good. ethan: yeah, so that's all the new features. lemonis: what size is this? jules: your size. ethan: i believe that's a large. jules: it looks good. lemonis: hold on a second. can you see me now? so, how are you going to explain your appetite for realtree? what is your pitch? well, more importantly, what is yopitch? jules: no, it's not my pitch, it's his pitch. he did it. lemonis: well, i thought you were doing it. jules: well, ethan did it. ethan: we're a team.

she, you know, was talking to the customers and doing other stuff. i didn't want to burden her with that or take her away. so we got to divide and conquer a little bit. that's the way i look at it. lemonis: i have zero doubt in your ability to be creative, but in order to move forward, right, if this business isn't going to be a one-man band, you do have to lean on people a little bit more. so, let's divide and communicate, not divide and conquer. ethan: sure. lemonis: do you want to head up? ethan: sure. absolutely. lemonis: oh, my gosh. jules: wow. lemonis: this place is awesome. bill: bill jordan. jules: hi. hi, bill. i'm jules. very nice to meet you. lemonis: i'm annoyed at the fact that ethan put this entire presentation together without involving jules. she's the one that is going to lead the sales organization. i don't know why he would do that. and candidly, if we don't secure the licensing deal, i'm going to question whether my investment makes sense or not. ethan: so, we started pretty small, and we started in that niche market of fly fishing because it was something i could wrap my brain around. so we basically took that military concept

and designed a set of pouches for fly fishermen so they could configure their own gear. brian: do you have any kind of design patent on that? ethan: patents in apparel are very difficult, 'cause they change one thing and it's different. so, that's kind of where we started in 2011, and then we expanded. instead of picking up the normal inflatables that were out there, i designed my own, 'cause there just wasn't what i was happy with, out there. so, i found a good inflatable manufacturer. a friend of mine approached me about making a raft 'cause my inflatable supplier made rafts. so, he said, "could we make a raft?" and i said, "sure, we'll do that." brian: what is the target market there? you know, from a first glance, you think, what is a tent on water? bill: you almost need to break down each market. you know, fishing, hunting, and see how it fits. ethan: no, that's more like a party cove, kind of beer drinking platform. lemonis: any feedback that people gave, ethan was somewhat dismissive about it. i'm standing here watching the realtree folks, and you could tell that they almost can't wait for the meeting to be over. ethan: we'd love to bring something back to you guys and not just be a licensee, if possible. lemonis: before we jump into that, can we take a two-second time-out? can you guys just give us a minute? let's huddle over here for a second. ♪

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lemonis: here's the number-one tip when you go into a presentation. know your audience, and go in there excited to talk about them, get them engaged and get their feedback.

jules: we're really excited to be here, 'cause i know a little bit of your story. when you were going to that first show. bill: mm-hmm. jules: and that you only had what you had in the booth that day and how walmart and bass pro came in and really, uh, partnered and helped you and developed relationships and that type of thing. those are the things that we're looking at, working with marcus, and then also working with you, so we're excited to be here today. bill: we are, too. glad to have you guys down. lemonis: i love the fact that jules did her research and that she opened up with the founder of realtree, creating this relatability about realtree's history. i could watch his engagement elevate instantly. man: oh, dang. jules: you can even stand up inside. bill: it's stable. man: yeah, yeah. jules: yeah, it's a drop-stitch floor, so it's got that taut when it's inflated all the way. brian: when you show this on a presentation, we're all sitting there thinking, "what is the use of that?" bill: right. brian: when you actually physically see it, feel it, touch it, it changes your perspective. lemonis: and with jules taking over, you can tell that she set the tempo perfectly. jules: this is our wader jacket. brian: tell you, it's some good-looking stuff. man: yeah, i love this. lemonis: she's engaging with them, she's having them try the products.

she's not over-talking them, and she's listening. brian: that's a high-end jacket. it's got welded seams. you know, the zippers are sealed zippers. i mean, it's very well-made. it's a good product. jules: so, bill, what do you think? bill: of course, that's a natural. jules: right? bill: i think that right there has just, uh, got a lot of possibilities. jules: yeah, i think so, too. so, uh -- so, like, we can do some business? bill: yes. for you. jules: [ laughs ] lemonis: glad we're going to do some business together. bill: i am, too. lemonis: thank you very much. bill: i'm glad you come down. i'm really glad you came down. lemonis: thank you so much. bill: pleasure to meet you. bill: thank you for coming down. jules: yes. lemonis: i thought you guys did good today. and you were really good at warming them up. the two of you were talking, he was getting more comfortable. and i like the fact that she went in for the ask. and you went into the right person because he fell in love with the product. jules: yes. lemonis: so, they love this. jules: yeah. ethan: it's fun. jules: well, who doesn't love it? yeah, once you're in -- lemonis: so, let's say that you only sell 1,000 of these next year. okay, so how much is two a day? ethan: it's $1.9 million

if we do -- lemonis: and then if you do 1,000 of those, how much is that? ethan: yeah, that's $3.4 million. lemonis: so, how much is that in total revenue? ethan: it's like $5.5 million. lemonis: selling two products, being very focused and having really good partners. jules: amazing. ethan: yeah, it's tremendous. lemonis: okay. in order for this company to be successful, it doesn't have to hit a grand slam. it can hit singles and doubles. and ultimately selling 1,000 rafts a year, it's not a stretch. this company could easily do $5 million in the next year. and the margins are good enough that this could be a very profitable business. let's just take it slow and make good money. anything for me? jules: anything for you? this is what i have for you. lemonis: i think ethan learned that he's got to be a better listener, he has to incorporate jules. if he can match up his skills with other people's feedback, he's unstoppable. okay? jules: yeah. lemonis: all right, let's get cleaned up. jules: awesome. lemonis: get out of here.

♪ lemonis: tcan i taste your pesto?.. lisa: it's delicious. lemonis: ...healthy meals, ready to eat and delivered right to your door. erik: we help a lot of people. lemonis: it's a service that's helped clients lose serious weight. -diana: she's lost 150 pounds. -lemonis: check it out! this florida company is on to something big. but their marketing campaign is offensive... erik: everybody come on over, meet the fuel food girls. it always tastes better when it's free. [ horn honks ] lemonis: ...the owner overbearing. erik: put a piece of basil on here. dress this up a little bit. sprinkle a little cinnamon on top. lemonis: if i can get the debt under control... erik: 'cause everybody's popping off with no money here. lemonis: ...as well as the owner... diana: you took us off the system. lemonis: you locked her out of the computer already? erik: i don't trust anything that goes on. lemonis: ...this company's bottom line could be in great shape.