man: going. lemonis: tonight we're gonna give you an inside look at an episode from season 5. now, i have a special guest, john weisbarth, who's the host of "tiny house nation," and the reason that i wanted him to come on is... man: hold it. we need to adjust. john: oh, man. lemonis: aw, geez. john: that's okay. this is my favorite part of being in television is watching people have to get on an apple box. lemonis: hold on a second. why don't you just cut his chair? man: i can dig a hole in the ground and drop you down. amber: john, how tall are you? john: 6'4". oh, it's so awesome. lemonis: in the last seven years of doing "the profit," i've visited nearly 100 businesses. let's go make some money! [ horn honking ] and i've traveled the country trying to fix the people... and you do $1 million a year? you should be proud of that. man: but we don't know how to keep any of it. lemonis: ...fix the process...

you see? it flimsy. don't ever make these again. you don't sell them. ...and create a few products. juli: it reduces anxiety and depression. lemonis: i kind of like it. i spent countless days working on these companies. how much money did you burn through? parker: $650,000. lemonis: but we can't always fit everything i'm thinking into the show. so tonight i'm giving you an inside look at an episode from season 5, tumbleweed tiny homes. i want to help you be a better c.e.o. because right now, you're a nice man and a terrible c.e.o. you say you have everything on the line, i expect you to fully immerse yourself in the business, put yourself at risk. john: that makes sense. lemonis: over the next hour, i'm gonna take you behind the scenes to share with you what i was actually thinking during filming... i've agreed to invest $3 million, and i will be 100% in charge. this is probably one of the most aggressive transactions that i've ever done in the history of the show.

john: okay, good. lemonis: ...and give you an honest assessment of my decisions. this business is upside down. it just sits with me in a very bad way. amber: you didn't want to run? lemonis: no, because at the end of the day, it's on a path to something. my name is marcus lemonis, and this is an inside look at "the profit." man: [ speaking indistinctly ] woman: rolling. lemonis: now, the reason that i brought john on is because he has seen and experienced everything in the tiny-home world, except what i've gone through, and i know you have a lot of questions. john: yeah. lemonis: are the questions gonna be like, "why did i do a deal here?" john: maybe. no, no, we'll see. lemonis: oh, this is gonna be good. john: alright. so many questions, let's start. lemonis: with my ownership in camping world, i've been in the rv space for over a decade now, and i feel that investing in tumbleweed would allow me to make a huge splash in the tiny-home market. amber: marcus, why were you interested in tiny homes? was it because of the rv business? lemonis: no, i think i was mostly interested because i saw the parallel

between my primary business, camping world. john: what do you think the biggest difference between an rv and a tiny house is? lemonis: the quality of craftsmanship. john: 100%. lemonis: that a tiny home is manufactured like a log cabin or like some sort of... john: built like a house. lemonis: yeah. john: it's the same construction. lemonis: absent the frame, you would think a house was being built. john: yeah. steve: hi. lemonis: i'm marcus. steve: i'm steve. lemonis: nice to meet you. steve: nice to meet you. it's so surreal actually seeing you in the face. lemonis: we're here. let's do it. what prompted you to get into this? steve: i'm a minimalist by trade. lemonis: do you live in a tiny home? steve: no, i live in a regular house now. i've got a family and kids. i actually live in sonoma and in colorado. lemonis: what happened to, "i want to be a minimalist"... steve: i still am a minimalist. lemonis: yeah. "i'm a minimalist, but i have two homes, one of them in sonoma." i just wanted to clear that up. john: i just love, you go, "okay." lemonis: yeah. i'm gonna bank that one, for sure. play. what did you do before this? steve: i was a restaurateur. i really don't have much experience in manufacturing. i can manufacture a burger. lemonis: okay. can you show me the models? steve: so we have the cypress, the farallon alta,

the elm 26 equator... john: those are nice-looking tiny homes. lemonis: it's like a log cabin. john: yeah. lemonis: but it's movable. john: yes. the one thing i noticed about all of these tumbleweed things that i don't particularly like is all that pine wood or that beetle kill wood. i mean, it's, like, the whole thing looks exactly the same. to me, that's not interesting. i like to see broken-up materials. these feel like you're going to camp. amber: john, have you ever slept in a tiny home? john: i have slept in a tiny home. lemonis: me too. john: but embarrassingly, as many times as marcus has. lemonis: which is uno. amber: one time. john: yeah. steve: they can pick their floor finish. they can pick their roof and window colors. people really want to get into these and customize them. lemonis: so what is your typical price for an average unit sold here? steve: right now, $80,000. john: that's a good price, i think. lemonis: ...capacity that the factory can actually produce? steve: we're currently producing anywhere from 8 to 10 a month, and we have about a 3- to 4- to 5-month backlog at any given time. lemonis: 3- to 5-month? steve: yes. lemonis: well, show me the shop. steve: yeah. lemonis: start to finish, how long will it take?

steve: it should take 16 days. this one is probably gonna take us 21. people really want to customize these a lot, so we get curveballs all the time for things that we've never done before. lemonis: like? steve: like folding porches. we had no idea what that was gonna entail. lemonis: what did it cost you to make? don't say you don't know. steve: our costs of labor and materials on one of these units is around 60%. lemonis: so your margins are 40%. steve: well, okay, so besides the cost of goods, there's probably about 10% additional costs in design, servicing, labor, sales. lemonis: your margins are 30%. steve: 30%. lemonis: do you think those are good? steve: i don't know if they're good or bad. lemonis: pause. john: yeah, now you're starting to realize. is this the moment where you're like, "oh, boy"? lemonis: the thing that concerned me is that it's sounding, initially, super inefficient. like, i don't need to see the financials to know we've got a problem. john: yeah. you're like... lemonis: okay, maybe i... maybe it's lunch. maybe it's time to go. john: yeah, totally. lemonis: the more i dig, the less i think he knows. you can't run a business that way. from sonoma.

how are you? i'm marcus. brian: i'm brian. lemonis: nice to meet you. mason: mason. lemonis: mason, nice to meet you. where did you learn how to do this? brian: military. lemonis: you're in the military? thank you for your service. those are my kind of dudes right there. lemonis: i'm like, "alright. i like these guys." if all the models that you guys make were standard units, how much quicker would the production process be? mason: significantly. brian: yeah. lemonis: double the output? mason: i would say so. brian: yeah. lemonis: how you doing, sir? austin: i'm austin baker. lemonis: hey, austin. austin: production manager out here. lemonis: so are you in charge of the floor? austin: yes, sir. lemonis: you want to give me a little tour, just you and i? austin: please. so i'm gonna show you the two types of trailers that we build on. we are fabricating our frames right here. we're building them. lemonis: you're not even buying them? austin: we're building them. john: yeah, this is crazy. austin: everything we can do, we do in-house. we are so jammed, and it's unnecessary. the word "custom" is sexy, and it sells. lemonis: it also does one other "s." austin: ruins us. lemonis: slows things down. john: see, i mean -- can i be honest? we're big proponents of what we do is really personalizing the space. what are the three or four things that really bring you happiness? lemonis: whatever it is.

i think ultimately for me, the frustration that i had with the customization piece was really about if you just had 6 models, 8 models, 10 models, pick a number, and just said, "these are the floor plans. these are the materials. yes, you can change in and out tiles or floors or stains or cabinets or fabrics or whatever it may be." it's why chipotle works. john: sure. lemonis: it's mexican food 100 different ways, but it's like, "pick this, pick that, pick this and get the hell out." john: sure, sure. lemonis: same concept. but when you've taken those ideas to steve, what does he say to you? austin: my ideas were shut down. he doesn't understand what we do out here yet. he's a restaurant guy. lemonis: has he ever worked in the shop? austin: no, and that's okay. that's not his job. that's what he pays me to do. lemonis: it's not okay. i believe that an owner of a business at some point needs to be integrated with his team. i don't expect it every day. there's administrative things that have to happen. john: sure. lemonis: but if your business is losing money and you know that the volume of production is part of the reason, and you know that you have a 3-month backlog, which means the demand outpaces the supply, you and i

would be like, "okay." john: yeah. lemonis: ..."how do we get one more out?" john: yeah. lemonis: just one more. steve: marcus, i wanted to introduce you to lee. lee: hi, marcus. lemonis: hi, lee, how are you, sir? what do you do here, lee? lee: c.o.o. lemonis: okay. steve: lee is brand-new. he's been with us a week and a half. lemonis: and so how does the reporting structure work here? austin: so we have employee. lemonis: yup, one. austin: we have leads. lemonis: two. austin: we have the foreman. lemonis: three. austin: you have the production manager. lemonis: four. austin: then i have steven slosher, who's the gm. lemonis: five. austin: then that's his boss. lemonis: six. austin: who's his boss. lemonis: seven. austin: yeah. lemonis: so seven layers between you and the people that make the magic happen. steve: correct. lemonis: does that seem like a lot to you? steve: yes, it does. lemonis: how about to you? lee: no, it doesn't. the only redundancy that we might have is austin because... lemonis: meaning... lee: ...you have a general manager, foreman. the foreman is over the two leads. lemonis: pause. did you catch what he said? john: "the only redundancy is this guy right here." lemonis: the guy we're standing right next to. dick move. john: what do you think that is? lemonis: it's not knowing your audience, and as a leader into a new business...

john: boy. lemonis: ...even if you believed it to be true, if you and i were standing there, brand-new to the company, we wouldn't be like, "yup, this guy right here. this guy has got to go." john: "i don't want to point any fingers, but this guy here." lemonis: it was clear to me that this guy didn't know how i think because that was maybe the worst opening because now i'm thinking to myself, "okay, dude. you're going." john: i think maybe lee was trying to posture a little bit. lemonis: yeah, it didn't work. john: just be true to yourself, kids. that's the message. lemonis: that's right, and know your audience. john: know your audience. lemonis: go ahead. how are you? tracy: i'm tracy. lemonis: tracy, nice to meet you. i just spent a little bit of time with austin. tracy: my husband's name is austin, yes. lemonis: oh, it's your husband? okay. so could you take me through the sales process? like, if i want to order a certain type of floor. tracy: so you're basically asking for a customization. lemonis: yes, can that be done? tracy: if the production team says we can do it, i'm not walking away from the sale. lemonis: why? tracy: so we get 20% of the cash up-front. if i don't have a lot of cash customers for the month, those guys are struggling for materials. lemonis: so better said, you say yes to anything,

especially if they're a cash buyer. tracy: yes. lemonis: okay. it's become clear to me that every single unit that is bought from this company has some nuance to it that is slowing down the process. tracy: this house right here is a custom one. lemonis: i don't understand how you're getting upstairs. austin: but you'll never see this in any other house. this was this lady... lemonis: how do you get up there? austin: she's gonna get a little stepstool right here. lemonis: so is there a disconnect between sales design and what's happening in the shop? austin: i can't blame sales because they have to make money. lemonis: i want to ask you a question. does steve know what he's doing? austin: no. lemonis: does he know how to manage people? austin: no. lemonis: does he know how to design things? austin: no. lemonis: who's really running this company? tracy: he's running the outside, and i'm running the inside. lemonis: doesn't something have to change? what's wrong? austin: so...what's wrong? lemonis: talk to us. tracy: just that we love this place so much, and we love those people. these people are here because they care. they're not here because of this paycheck. i can promise you that. lemonis: the idea of being in the tiny-home business excites me. i mean, there's a good recipe there. it just needs some major tweaking.

what's the year been like for you? bernadette: we worked really hard. lemonis: how hard has this been on him? bernadette: incredibly difficult. steve: i have taken a huge risk just to get here today. lemonis: do the people that work here know how bad it is? steve: the top managers do. the rest don't. lemonis: and so if the business closes, what happens? bernadette: we start over from scratch, yeah. lemonis: what does that mean? you have to file bankruptcy? bernadette: about, like, a week away from that. lemonis: wow. in looking back, i'm not so sure how sincere they were. john: hmm. really? lemonis: you say you have everything on the line, i expect you to fully immerse yourself in your business and put yourself at risk. john: that makes sense. amber: john, you had heard of tumbleweed, right? john: yeah, absolutely. amber: what's their reputation in the business? john: my impression was always oh, jay shafer, who kind of is credited with starting this tiny-house movement, like, "oh, he started tumbleweed," and then he left. amber: right. john: so they had that sort of legacy brand name. lemonis: do you have jay's number? can he come back? so your total revenue for the last 12 months is $6.9 million.

your gross profit is $2.5 million. your total expenses? steve: $2.6. lemonis: and so then your net profit would be... steve: minus $100,000. lemonis: okay. have you ever made money here? steve: yes. lemonis: what did you make in '12? steve: about $100,000. lemonis: what did you make in '13? steve: about $100,000. lemonis: what did you make in '14? steve: $400,000. lemonis: what did you make in '15? steve: in '15, we lost money. when we expanded, about $1.1. lemonis: so $100,000, $100,000 and $400,000 is how much? steve: $600,000. lemonis: you're at a $600,000 positive. you lose a million one in '15. steve: mm-hmm. lemonis: takes your $600,000 positive to a $500,000 negative. steve: well, there were no retained earnings, so these earnings were all taken out. lemonis: yeah, because you took it all. what do you mean they were taken out? where did they go? steve: to me. lemonis: so you took all the money out of the business. and so at the start of '15, there was no money here. steve: yeah. john: and you're thinking, "this is a good investment." lemonis: total liability, $2,885,000 against assets of $1,239,000,

and that means that your negative equity, this business is upside down, insolvent to the tune of $1.6. steve: correct. lemonis: the debt is so significant. really, it just sits with me in a very bad way. amber: can you explain what it means when a business is insolvent? lemonis: when a business is insolvent, it means that its liabilities... john: can i get a notepad? i feel like i should... i'm, like, in business school. no, i like this. this is good. amber: we've all gotten a business degree on this show. john: i know. lemonis: so the insolvency in a business means that its liabilities, what it owes people, is greater than the assets that it has. so whether you have bank debt or payables or any sort of loan exceeds the amount of assets, which is cash, inventory and receivables, and there's really no way out of insolvency unless more capital goes in or debt that's on the books converts to equity. amber: right. lemonis: so when i look around this factory, how did all of this get funded? steve: so originally, customers were paying up-front. lemonis: so essentially, customers financed this whole business.

steve: and also in addition, i put some money in. it was $1,500. lemonis: 1,500 bucks. steve: correct. john: that look, i love that look. you go... lemonis: i just want you to know, i took out $600,000... john: but i put some of it back! lemonis: ...but when it got tough, i dug in my pocket, and i put in... john: $1,500. lemonis: ...$1,500. where you're sitting today is in a business that, quite frankly, is out of business, and i have a real problem with the fact that you took $600,000 out of the business in a business that's growing. why did you take it all out? steve: i didn't see this coming. i didn't know it was gonna happen. lemonis: who gives a [bleep] is this really a smoke and mirrors business? steve: no. we have a real product. lemonis: okay. are you running a house of cards? steve: i'm running on the edge. this has me... lemonis: do you know what "fakak" means? steve: yes. lemonis: what does it mean? steve: it means all screwed up. lemonis: that doesn't scare you, does it? steve: curious as to why you say that. lemonis: because you're reckless about it, because you didn't save any acorns for the future. the fact that you're not scared of debt in one breath,

but you've taken on debt like... this doesn't even, like, phase you. that freaks me out. i'm willing to lend $3 million. this is really important... john: okay, okay, okay. alright. lemonis: ...because this is probably one of the most aggressive transactions that i've ever done in the history of the show. john: okay. good. whoo. t-mobile has the first and only,

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john: weisbarth. lemonis: weisbarth. john: yeah. how do you say your last name? lemonis: lemonis. john: see? easy. lemonis: but some people say "lemon-is" and... john: yeah. amber: "lemon-ya." john: ooh, lemon-ya. oh, i like that. lemonis: how do people say your last name sometimes? john: wheeze-barth because the w-e-i-s. lemonis: okay. i like that name. john: great. i like...what did we call it? amber: perfect. lemon-ya. john: yeah, i like that name. amber: lemonade. lemonis: the fact that you're not scared of debt, that freaks me out. this doesn't even, like, phase you. steve: no, i completely understand what you're saying. lemonis: so you have a business that's $1.6 million underwater, but the product is great. the people that work here are spectacular. phenomenal. so i'm willing to lend this business $3 million to clean up the payables, the lenders... john: this seems so fast to me. lemonis: ...so that the employees can continue to work and so that the company can breathe. steve: yes. lemonis: in exchange for that, i want to be paid back, and i want 75% of the equity. john: 75%? lemonis: okay.

amber: pause, and you said "lend," too. lemonis: no, but this is really important... john: okay, okay, okay. alright. lemonis: ...because this is probably one of the most aggressive transactions that i've ever done in the history of the show. john: okay. good. whoo. lemonis: but i basically just told the guy is you've got a $7 million business. you're $1.6 underwater. i don't trust you, and so i'm willing to lend the company $3 million. the business is going to pay me back, and when it does, i'm still gonna own 75% of the business. john: wow, that's...yeah. amber: and how did you arrive at $3 million? lemonis: that's a great question. i arrived at $3 million because i wanted to take the $1.6 that he was underwater and get it above water. john: sure. lemonis: so clean up all the debt, and then i wanted to make sure there was sufficient working capital so that it didn't happen again, but remember that if i lend the business $3 million and i own 75% of it, who did i really lend the $3 million to? john: so you lended it to yourself, i guess. lemonis: i lended it to myself. john: see, that's smart. lemonis: well... john: you know what? you should do a show about this stuff.

you've got a good brain. lemonis: play. steve: it's certainly not the offer i was expecting. lemonis: what did you think the offer was gonna be? $2 million and i would sprinkle fairy dust in here? steve: and 51%. lemonis: i want to help you be a better c.e.o. because right now, you're a nice man and a terrible c.e.o. c.e.o. is not a title. it's a philosophy. john: i like that line. lemonis: and so we have a deal? steve: yes. thank you very much. lemonis: okay? steve: okay. john: i mean, is he getting any counsel, or are you just like, "boom, there it is," and done? lemonis: hey, guys. we need everybody together right here. john: you like this moment. lemonis: love it. amber: it's his favorite part. lemonis: i have agreed to invest $3 million, and i will be 100% in charge. now, the challenge is, in my opinion, we have to standardize this process to really start to crank things out. we will have four standard models, and that's it. okay? so we're gonna flatten out the organization,

and we're gonna be a team. alright. let's get to work. john: how many cameras do you have there? lemonis: two. john: it's good work. ♪ ♪ lemonis: alrighty. i want to spend the evening overnight in a tumbleweed tiny home. amber: why did you want to do this? lemonis: i wanted to be able to go back to the floor with the guys and gals that work there and say, "first of all, your work is awesome." john: yeah. lemonis: "second of all, who's got ideas about how to make it better because i've got a few because i slept in it last night?" john: yeah. lemonis: i feel like you have to at least give respect to the work and the lifestyle. john: you've got to walk in their shoes just a little bit. at least see what it feels like. lemonis: plus i was kind of excited. i felt like i was going to summer camp. john: it is. lemonis: when i went inside the unit, what was most interesting to me was how space gets utilized. john: that's everything. lemonis: this isn't well thought out.

furniture is in the way. i wish this furniture was integrated. this window is too small. no collapsible tables. i think their use of space is not really great. get my fat ass up here. it's actually kind of cool. what i felt what missing from the unit is little things that we have become accustomed to having in our homes. john: i don't like all that wood. i know i keep saying it. too much. ♪ steve: good morning. lemonis: good morning. steve: how did you sleep? lemonis: i didn't sleep bad. i like the fact that there was a very homey feel to it. i like the pitch of the roof. i didn't feel claustrophobic. as i think about this place, there's a number of design changes that i would make. it's that i look for little creature features, and so i thought about, like, "where do i charge my phone at night?" so have you really slept in one? steve: i have. lemonis: overnight?

steve: overnight. lemonis: how many times? steve: i've slept in one in sonoma. john: we're all tied. lemonis: yeah, yeah, no, pause. amber: pause. lemonis: that's this dude's business. john: i know. lemonis: and i didn't want to be tied with him, and the fact that he wasn't unbelievably versed on this company... john: that is strange to me. lemonis: it wasn't looking great for him. john: no. woman: we need some more storage. lemonis: in order for us to start designing the standard model, we're gonna have to get feedback from customers, so i'm taking a unit and the team over to camping world in colorado springs. steve: alright, folks. i want to hear some feedback about what creature features this is missing and what other changes you would like to see. man: i would give it more storage space. i didn't see much cupboard space or storage space in the unit. lemonis: okay. john: everyone wants storage space. lemonis: is that a big deal? john: totally. young woman: pull out and it will just be there as a piece of furniture. lemonis: thanks, folks, very much for talking to us. woman #2: thank you. lemonis: since austin is in charge of overseeing the production of the tiny homes,

i wanted to show him some features and benefits from rvs here at the dealership. all of this furniture is integrated. this table could extend, but it's part of the place, and i think the thing that's missing in the tiny homes is the lack of integrated stuff. john: which i was surprised they didn't have more of. lemonis: that was probably the one thing that i was most surprised about, and i wanted them to understand that the rv industry, the way that the manufacturers have thought about how to use space... john: it's no wasted space. boats and rvs, you can learn a lot from. lemonis: i agree. john: that's what informed us. lemonis: how do you think steve is right now? austin: i think as a leader, very, very strong, but i would tell you with lee, it's only a matter of time. he's gonna fire me. lemonis: why? austin: steve and lee, they were meeting. they had conversations about the 7-layer cake, and i was the sacrificial lamb. i'm nervous. i don't know what to expect, and that's why i guess i'm scared. lemonis: so why wouldn't you talk to steve about solving that problem for you? austin: with lee, he's an authoritative person.

steve, he absolutely hates conflict. lemonis: but he can't lead you if he doesn't know what you're thinking because if he's your ultimate leader, right? austin: right. lemonis: then why wouldn't you allow him to lead? let's go talk to him. john: austin is like your brother. lemonis: he's a good dude. i love the fact that austin feels comfortable enough to talk to me about what's happening in the business, but i can't resolve their problems. i'm not here every day. austin: i guess i'm just gonna squash this. i'm afraid that with lee, the way he was treating it, it's done. it's only a matter of time. lee: you resign. you can't have people, especially managers, who just resign and then decide, "no, i'm gonna come back next day. maybe the next day after that, i'll decide to resign again." john: this is a tough one because i totally see what austin is saying, and i see, you know, where lee is maybe coming from and certainly what steve is saying. let's see what you do. lemonis: if you're looking to take your business to the next level, log on to...

austin: i guess i'm just gonna squash (burke) we've seen almost everything, so we know how to cover almost anything. even a "gold medal grizzly." (sports announcer) what an unlikely field in this final heat. (burke) not exactly a skinny dipper, but we covered it. at farmers, we know a thing or two because we've seen a thing or two. so call 1-800 farmers to get a quote. ♪ we are farmers. bum-pa-dum, bum-bum-bum-bum ♪

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it's only a matter of time. lee is new. he's only been there a couple of weeks, but he's an authoritative person, and he's gonna fire me. i'm the sacrificial lamb, if you will. i guess what i'm getting at is just asking for a little bit of help. steve: there's been a disconnect between you and i for sure, right? austin: it's the layer in between us. steve: so first thing monday morning, it's obvious to me we should talk about it. lemonis: first of all, i love the fact that you're having an open dialogue, and you've been a great listener, and you've been a great communicator. the guy gives you 100%. you have to hold on to them. they have to feel protected. your job is to protect them. steve: yeah. austin, you don't have to worry. john: you can see austin just... lemonis: yeah. he loses his job. he's got to provide for his family, you know? amber: is it always awkward for you when you have to intervene between business owner and employee? lemonis: it can be awkward, but i really feel like if they were good communicators, they would have done it before. i think my frustration was i'm very much of a front-line supporter, right? so the guys and gals on the front lines are more important to me than the guy in the front office. amber: right. lemonis: in this particular case,

i felt like i needed to provide some ground cover for austin. it's, like, defending the guy that can't defend himself. amber: right, right. lemonis: the reason people will go to battle for each other is if he knows you'll have his back. austin: shoulder to shoulder, arms in arm. i'm...you...yes. lemonis: okay. let's roll. i think it would be a good idea if we can start working on what a standard unit would look like. tracy: perfect. steve: absolutely. lemonis: now that we've gotten the feedback from the customers on what they like and don't like, i want to take that information and incorporate it into the process of making the four standard units. tracy: i would add the... lemonis: i love this process. john: yeah. lemonis: redesigning spaces. is that move possible, guys? man: definitely possible. it opens up space to enlarge the bathroom if needed and the closet space. lemonis: okay. ♪ when we talked the other day about austin and lee... steve: yes. lemonis: ...i wanted to get an update on where you are.

steve: myself, lee and steven started talking through the situation, and austin was pretty frustrated by it and left. he said, "i quit," and he walked out. i think he's having a hard time with the changes. lemonis: so he's not working here anymore? steve: correct. lemonis: i got to be honest with you. i'm totally confused because a couple of weeks ago, steve and austin are talking about how they're going to work together, and now i'm finding out that yesterday austin stormed out of here and quit. what happens when i'm not here? what happened yesterday? austin: they said that we need to figure out how to talk about the 7-layer cake, and their way of addressing that and through a conversation was showing the hierarchy on the board... lemonis: okay. austin: ...and i jumped the gun because they circled me and then the three people below me. lemonis: meaning that one of you guys was gonna go away. austin: right. lemonis: i partially invested in this business because of you. amber: and john, this happens to us quite a bit, a lot of times just because we don't stay there for a week or two consecutively. john: yeah. amber: so we'll leave. we'll bounce to another business and someone quits, you know? john: it's just a nightmare. lemonis: it's tough. amber: yeah. john: yeah.

lemonis: i thought we were going to work together. i told you that [bleep] happens out here, not up in some fancy office. austin: someone is gonna get the axe, and it better be me and not them. lemonis: it ain't gonna be you, and it ain't gonna be them either. it ain't gonna be anybody that's on the floor. austin: thank you, man. thank you, and i believe you. lemonis: why don't we get everybody together in the conference room from yesterday, okay? austin: yes. lemonis: so i know you guys had a get-together yesterday. do you want to maybe lead the process? steve: sure. okay, so what happened is yesterday we had a meeting that started off on the shop floor and led into here, where austin, you walked out. austin: guys, come on. i put three years of my heart, soul and energy into this place, and then my world is turned upside down. lee: i agree in premise that we have a structural issue to fix in this company, but there's a difference between staying in the room and hashing it out and looking at your colleagues and saying, "you don't know your business. i resign." lemonis: so were you mildly relieved when he left yesterday? lee: the company is not profitable. the business model is not successful.

austin: is it their fault? lee: the plan -- you're not letting me finish. austin: okay. lee: you resigned. can't have people, especially managers, who just resign and then decide, "i'm gonna come back next day, and i'm gonna work and maybe the next day after that, i'll decide to resign again." steve: if you would have stopped and said, "guys, i am not comfortable with this. i need the rest of the day to process," that's one thing, but you didn't contribute. you just said, "hey, i'm out of here," and... lemonis: but i mean, steve, a guy that had been with you from the beginning that you talk very highly about, he panicked. john: hold on. pause for a second. so i agree with steve. you have to talk through it. you can't just go like, "oh, well, that's it. it didn't work out." lemonis: i'm gonna take my ball and go home. john: yeah. this is a tough one because i totally see what austin's thing, and i see, you know, where lee is maybe coming from and certainly what steve is saying. let's see what you do. lemonis: but my issue is that steve's responsibility is to mitigate the damage. john: yeah. lemonis: or protect the business. john: yeah, okay. lemonis: play. what is your opinion about what should change in the seven layers? steve: these two would go to one layer, and these two would go to one layer. so we're going seven to four. lemonis: to four. and so just out of curiosity, i'll go ahead and start with you because you're squeezing yourself.

is you or lee surviving? steve: why not both? why can't there be two people in the same layer? lemonis: are you really trying to sell me on this [bleep] he was duplicating what steve should be doing, and so it was really down to lee or steve. the question is, are you gonna be here? is steve gonna be here? are neither of you gonna be here? that little vent that it's no won't stay open.. except it is. that's why the vent is one more thing we check before a car can be a certified carmax car. the way it should be. carmax. somewhere you'll never find... sike! we put them everywhere. grocery stores and supermarkets, gas stations, and chiropractor's offices, bowling alleys, and grocery stores,

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even this one. steve: why not both? why can't there be two people in the same layer? lemonis: how? are you really trying to sell me on this [bleep]? in one breath, you're saying you think there's too many layers. your suggestion is you're co-managers? steve: correct. lemonis: so what we're gonna do is we're just gonna pile them all into one layer. john: oh, god. amber: pause for a second. john: i notice that you're not laughing. amber: marcus, do you think that steve and lee felt threatened by austin, and that's why they tried to push him out of this new business strategy? lemonis: no, i don't think steve felt threatened by anybody. in this particular case, i think austin was playing everybody, including me... amber: right. lemonis: ...and i think lee was playing everybody, including me, and steve, the owner/manager of the business should have been saying, "look, i don't want marcus having to deal with this. i don't want the other employees dealing with this. you guys either get your act together or you're both gonna go." john: yeah. lemonis: and he didn't even pick a side. he didn't have an opinion. he was just sort of... john: he avoided the conflict. lemonis: he avoided the conflict.

john: yeah. lemonis: which is a problem. john: sure. lemonis: steve, this is a very important moment. both of our jobs is to put the company in front of your own personal interest, and so you are permitted to come back to work here. austin: yes, sir. lemonis: and you and i will continue to work together. steve: perfect. lemonis: alright? this is the most drama-filled manufacturer i've ever been to in my life. john: oh, lee did not like that. amber: nope. john: ooh. lee: so what are we thinking about the next few weeks? what would you like out of me? lemonis: i think you have to decide if you feel like, you know, you could add value here. i think that's the question. john: are you going after him at this point? lee: i think you need me. austin has some capabilities, but i'm not sure that he could run at the layer that really should be required for a company this size. the right model is to have a gm or a site leader for this size operation. this plant, you would have to burn it to the ground and redo it. lemonis: that freaked me out when the guy said it. i'm gonna burn it to the ground and start over. i was like, "come on." the question is, are you gonna be here? is steve gonna be here? are neither of you gonna be here? pause.

amber: did you think lee was jealous of austin? lemonis: no, i think lee was too new. he just didn't get in there into a new place and befriend the guys on the floor. he should have really created an atmosphere where they were rallying behind him, not running from him. amber: yeah. john: i had a soccer coach my sophomore year. i was the captain of the varsity soccer team. thank you, i know. doesn't happen a lot, but he pulled me aside, and he said,... amber: let me guess. goalie? john: we went to a small school. the point is this. the lesson was he said to me, "people will follow someone that they don't want to let down much more than someone they're afraid of." i've taken that with me, and i try to do that. ingratiate yourself, rally the troops. lemonis: work with them, be one of them. john: they're gonna work so much harder for someone that they believe in. with guys like this, all the carpenters and construction guys i've ever met, like, that matters. lemonis: it's like "the outsiders." john: yeah. lemonis: we needed him to be ponyboy. currently the trailer manufacturing of the frames themselves takes up over 30% of the floor space,

and so what i want to do is i want to outsource the manufacturing of those trailers, and the amount... john: that was a great call. lemonis: i can run through that... three more units a month. ...almost double the production of the company. with the additional space being freed up in the factory, they'll be able to finish the existing customized units and now start making standardized units. john: oh, yeah. things are looking up at tumbleweed. lemonis: oh, hi. john: guitar riff. lemonis: i'm heading back to tumbleweed. i want to check in on progress, and i want to see what's happening with the standard unit. steve: so we're moving along. lemonis: anything changed in the staff? steve: actually a couple people left. lemonis: people left? steve: yes. lemonis: oh. okay. steve: yeah. who left? steve: so lee did leave. lemonis: why did he leave? steve: he was really, really upset about austin being brought back, being overruled on that. that was a hard thing for him. lemonis: right. john: that kind of made you happy inside, didn't it? lemonis: i was like, "oh, well. bounce."

...and that he did it so quickly, but there's a layer problem, and so i feel like it's necessary anyway. john: there it is. lemonis: oh, well. bye-bye. steve: i'm actually really grateful that you said you're bringing him back. it was the right call. austin: this is our utility closet. lemonis: for what kind of model? austin: the standard. steve: it's actually gonna all of the models. lemonis: what's in here? austin: we have a furnace. we have an air exchanger. this could be an on-demand water heater, your electrical panel and your 12-volt action going on right here. lemonis: i want you to patent this. this is the reason that the company can be worth something because you've designed something that allows standardization to work. this cube can go in any unit. steve: correct. lemonis: it is pretty gratifying when people start to realize that the things that you're trying to put in place not only will benefit the business but will benefit them, and that was a moment for me... john: yeah. lemonis: ...seeing him out on the floor and understanding how the ac unit was gonna work or how the generator was gonna work or how things were working is really all i ever wanted. john: yeah. christian: we have four models total with two floor plans per

is what we're gonna work through and end up with a total of eight. lemonis: so i think now that you guys have got your head around that, what i want to do is i want to take one standard unit and this team to a national company that could potentially buy maybe 10 to 15 or 20 a year, but i need it to be done in probably 2 1/2 weeks. steve: i'm gonna push back on marcus here for a minute. lemonis: let's go look at the new tumbleweed tiny homes. woman: sounds good. john: so this design, really boring-looking.

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♪ just sell it to carmax. we'll buy any car. even this one. the way it should be. carmax. even this one. so my concern is we took our best guys, and we put them on this unit for it to get done in 2 1/2 weeks, and the other ones get slowed down. one of our rules is we've got to protect the floor, and when you do this, we don't protect the floor. john: i would say that i like this moment. lemonis: that he's pushing back? john: yeah. lemonis: yeah, me too. i want him to. i actually appreciate that because that shows me a commitment to being a leader. without that, i just didn't know who was gonna run the business. hallelujah. i think your explanation of wanting to protect the stability of the floor makes me want to follow your lead, and i appreciate you having that evolution to say, "i want the sale bad, but i'm not willing to break my people or my customers for it," and that for me is really the epiphany.

so what is the time? steve: well, it's 3 1/2, 4 weeks. lemonis: so can you compromise 3 1/2? steve: yeah, we can do 3 1/2. lemonis: so the task is to get this unit made. we will take the unit to a location, and the group will pitch the entire company. okay? i'll let you guys work. john: the old steve would have just been like, "yeah, oh, yes. we can do that," whether they could or they couldn't. lemonis: trying to be a people pleaser. now that the team has standard units in production, we can accelerate the purchase of raw materials, improving our margins. not only do we have them readily available, but we're getting a pretty significant discount because we're buying in bulk, almost 8% on the material side. i estimate that it will be close to $4,000 a unit. across 200 units a year, that's $800,000 of additional gross profit. this is a standard floor plan? steve: it's a standard floor plan. lemonis: so how many days would this have normally taken to make as a custom unit? steve: would have been about 21, 22 days. instead it's gonna be about 16, 15 days. lemonis: and what did they pay for it?

steve: $80,000. lemonis: and what did it cost you to make? steve: our costs on this one are gonna be $46,000. lemonis: so your margins are 40%. steve: 40%. we're improving. lemonis: and how has austin been? steve: he's been amazing. he's doing an amazing job. we are communicating in a way that we never communicated before. austin: he's talking to us. he's getting involved in the... instead of just making a decision, he's seeing how those decisions are effective. lemonis: is he spending time on the floor? austin: heck, yeah. i don't even know when he's left. john: this is a nice moment. i like this. austin: we're not having to reinvent the wheel, per se. we know what we need to do, and we're just gonna execute on our plans. ♪ lemonis: now that the process is really right and the standardization has been implemented, i want to take steve and the team, along with one of the units, to meet with representatives from equity lifestyle properties. the primary reason is to really see if there's a real potential for big orders here and if steve truly can sell it with conviction. how are you? jeff: hi, there. how are you doing? lemonis: i'm marcus. jeff: i'm jeff wehrung. nice to meet you. lemonis: nice to meet you, sir.

steve: good to meet you. i'm steve. john: so this design... amber: pause. lemonis: pause. john: ...with the boxy design, it's such a... it's a tough thing, right? the most efficient use of that space is a giant rectangle, but they're really boring-looking. even when you break up the outside, you know, did a nice job doing that, it's... i love when you can have an interesting-looking tiny house. lemonis: like the ones we saw before that? john: yeah. those are, like, super cute, and that, you would welcome into your community, you know? maybe not you, but i mean... lemonis: play. austin: there's more storage in this house than any of them. pat: very nice, yeah. very clean. lemonis: it's bright in here. tracy: it is, very bright. lemonis: it's airy. steve: we did change the lights, didn't we? austin: yes, we went to recessed lights, led lights. the bedroom is up on a dimmer. lemonis: oh, let me go try. pat: very nice. lemonis: boy, i see the wood so differently now that you've pointed it out. john: it's the only thing in there. john: break it up a little bit. lemonis: yeah. tracy: how you doing up there, marcus? lemonis: good. tracy: you like that dimmer? pat: okay, nice.

lemonis: just so you know, dimmers are my favorite thing. they are my favorite thing. austin: you see the usb up there you can plug your phone into? lemonis: i think what i love about the standard unit more than anything else is that the team really listened to what the customers said. integrated furniture, space, that's the key to manufacturing, feedback to final product. tracy: the bathroom, ladies. woman: yeah, this is huge. pat: wow, nice. oh, this is great. amber: what did you think of the layout with all the tiny homes you've done? john: super efficient. it's all about efficiency. amber: right. john: that's what a tiny house really is. tracy: every inch counts with a tiny house, right? pat: absolutely. and then i know we have a similar unit, and the pitch of the roof was a little bit higher. austin: yeah, you raised it a little bit? pat: it makes a big difference when you're in the loft. lemonis: to make the roof higher? pat: yeah. would you have that flexibility? lemonis: if he starts agreeing to, "well, we'll change this by an inch and that by an inch, move the roof up, and we'll do all these things," i just wasted a bunch of time. we're not doing that. amber: john, how are they different than what you see today?

john: the only real difference is the quality of the finished material because you're only using a little bit because the space is much smaller, and it really elevates the space. lemonis: perceived value is a lot higher. john: totally. lemonis: and i was surprised that i didn't address that more. i should have been thinking way more about the aesthetics and less about the construction. that was a big miss on my part, but that's why you're here. john: that lesson was free. ow. lemonis: we want you to feel like you're connected to the business. austin: i don't even know what to think. i feel like i'm dreaming or something right now. lemonis: they ended up leaving. steve fell back into his old ways, and the business still owes me all of the money. john: ooh. t-mobile has the first and only, nationwide 5g network. and with it, you can shape the future.

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lemonis: to make the roof higher? pat: yeah. would you have that flexibility? steve: so just keep in mind as long as we can make them standard, then they're gonna be great. pat: right, right. lemonis: good answer, brother. i've got to be honest, i'm really impressed that steve isn't falling back to his bad habits where he would let a buyer of a product just drive the process. what's changed with steve, guys? tracy: i feel like he's actually reaching out to a lot of our employees, and they're recognizing it, and they're seeing it. austin: i've heard from the floor they use your name now. you helped involve... steve: thanks. austin: ...the people and the business. i respect the crap out of it. it means because he's actually out there on the floor, and it's a hard job. steve: thanks. john: this is a cool moment. lemonis: steve and i, we've made the decision to have you guys become partners in the business, and we want to distribute some equity to you,

and we want you to feel like you're connected to the business as more than just a team member with a paycheck. tracy: i don't know what to think about that. i think that's amazing. austin: i don't even know what to think. i feel like i'm dreaming or something right now. tracy: hard work pays off. lemonis: that's right. amber: what made you decide to do that, give them equity? lemonis: why? amber: yeah. lemonis: it's my schmuck insurance. those two, the husband and wife, were really integral to the way the business functioned, one of the sales side and one on the manufacturing side, and i wasn't comfortable that if i left there without them tied to it, that it would work. john: yeah. lemonis: play. when i think about my investment into tumbleweed, i probably couldn't be more excited because with the new standard models and the new manufacturing process and an unbelievable team on the floor and a new revived leader, as far as i'm concerned, tumbleweed has a very bright future. john: so when you go in, you saw austin.

you sort of invested in him. lemonis: i invested in the staff, right? and my knowledge of the industry. they ended up leaving. i think steve fell back into his old ways, and we're now in a situation where steve is still there. he stopped communicating with me. the business still owes me money, so i'm a lender today, and it's probably the biggest challenge of doing business on television. john: yeah. lemonis: it is more real than i would have ever imagined that it could become. and so over the course of these deals, a good chunk of them have gone bad. the difference between people that it works out for and people that is doesn't isn't the math. it isn't the business. it isn't any of that. it's character. john: wow. amber: yeah, the people. lemonis: that's it. you want to be partners in this business? john: i don't know. i have to see the financials. lemonis: let's assume that we own it all, and there's no debt. john: okay, let's do it. alright. good. john: done. i think that's binding. you guys were rolling, right? lemonis: totally binding. john: okay, good. ♪

. i'm craig melvin. and i'm natalie morales. and this is "dateline." ox: blood evidence doesn't lie. it actually tells a story. craig melvin (voiceover): you're there at the crime scene. anna cox: you can almost recreate the crime. craig melvin (voiceover): right there on the wall, a mystery scrawled in blood-- three cryptic letters. what would you make of this? is that a word? is that a person? the clues pointed so many different directions that it was a total mystery. craig melvin (voiceover): the case, the murder of a former model and flight attendant. roc herpich: when she got dolled up, oh my god-- gorgeous. craig melvin (voiceover): did she write these letters? was this a hint to who killed her?