and making macarons on wednesday! nina: yes, that's true. finia: i'm gonna shoot for that. lemonis: i thought you were shooting for the moon? finia: i am shooting for the moon! lemonis: can we sell some more macarons first? finia: yes. lemonis: okay. ♪♪ lemonis: tonight on "the profit"... this is a nice case. matthew: yeah. thank you. lemonis:...an la startup is creating buzz with its fashion-forward phone cases. if it breaks, you're buying me a new phone. matthew: sure, 4 feet. [ laughter ] pretty good, right? lemonis: but behind the breathtaking sales... matthew: last year, we did 1.7. lemonis:...and the beautiful designs... these are kickass. ...the cracks are starting to show. the young c.e.o., matthew, does whatever he pleases... matthew: i'm acting c.e.o. we go with my decision. i am still in control of this company. lemonis: ...leaving his partners, charlotte and skyler, totally demoralized. skyler: the thing is, is that, you're still being completely self-centered about it. it's all about you. it's all your authority. you're all afraid of losing your power. lemonis: he's made the product selection too narrow.

man: it's very feminine. it doesn't seem like you're speaking to me, as a customer. lemonis: he makes terrible investments. this feels like a show that you went to with no research. and he's even using the company as his own personal piggy bank. skyler: i mean, there's so many personal expenses in here. lemonis: what if the business doesn't have the money to pay it? matthew: it does. we're making millions. lemonis: if i can't teach him to respect his people and his company... they've done nothing but eat from a bag of [ bleep ] since i met you. ...the casery will fall apart. 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." ♪♪ [ cellphone ringing ]

[ text message alert ] the casery has been around for about 3 years now, and in that short period of time, well, it's had remarkable success. so, i'm excited to check it out. the mobile-accessory industry is about $100 billion business. so, just a small piece of that -- well, you do the math. oh, wow. this place is huge. hello? hey, how are you? i'm marcus. matthew: hey, marcus. i'm matthew. lemonis: matthew? matthew: yeah. nice to meet you. lemonis: nice to meet you. matthew: i'm the owner. lemonis: oh, you are? okay, that's cool. matthew: welcome. lemonis: nice to see you. matthew: yeah. lemonis: it's a big building. matthew: yeah. we just moved. and we're still kind of transitioning right now, still. we got an amazing rate on the place, but we had to put some work into it, for sure. lemonis: can you introduce me to everybody? matthew: yeah. absolutely. lemonis: that would be great. matthew: i'd love to. lemonis: so, who are these folks here? matthew: okay, this is the production staff. lemonis: hey, guys. how are you? matthew: will you all introduce yourself for marcus? lemonis: do you know their names? matthew: i know about half of them. i don't know yours. mason: mason.

lemonis: mason. so, you know mason's name? how are you? i'm marcus. briana: briana. lemonis: nice to meet you. do you know briana's name? matthew: no, i don't. lemonis: i'd like to introduce you guys. matthew: yeah. lemonis: my first impression of matt is that he seems like a nice enough guy, and the company has really grown fast, so he's adding staff on a daily basis. but he should probably learn his employees' names. do you guys use all these products yourselves? does everybody have one on their phone? man: no. lemonis: do you have one on your phone? briana: no. lemonis: do you? man: no. lemonis: do you have one? mason: i actually don't have an iphone. lemonis: so, just iphone cases? matthew: right now. if you're, like, the type of girl who likes to change their phone case every 6 to 8 weeks, generally, you have an iphone. lemonis: is this only for girls? matthew: yes. this market is basically all women. you do not find this in men's sections anywhere. lemonis: and so, where's the bulk of your business come from? matthew: wholesale -- b to b. so, we have small, independent retailers, probably a few thousand, we sell to. lemonis: and so, you go to shows like new york now and stuff? matthew: yeah, we were there. lemonis: you were at new york now? matthew: we do it all. we do about 18 shows each season. lemonis: wow. how much do you spend on trade shows? matthew: probably $350,000 to $400,000 january, february, march, another 350 to 400...

lemonis: and what kind of revenue are you generating out of those? matthew: less than that. lemonis: oh, really? matthew: it's marketing and revenue. lemonis: look, trade shows are a good idea. but if you're not making money, which is by generating revenue that's greater than the expense, then you shouldn't go to them. hi. charlotte: hi, i'm charlotte. lemonis: charlotte? charlotte: yeah. lemonis: i'm marcus. charlotte: nice to meet you. lemonis: nice to meet you. charlotte: thanks for coming. skyler: skyler. nice to meet you. lemonis: nice to meet you. and are you the only owner? no. so, i own 90%. charlotte owns 7%, and skyler owns 3%. lemonis: and what are your roles here? charlotte: i'm the creative director. lemonis: so, all of the designs? charlotte: yeah. i oversee all of it and come up with all the ideas. skyler: so, i'm the c.o.o. i also, basically, take on a lot of the c.f.o. responsibilities. so...i've been doing a lot of the... lemonis: that's an interesting crossover. skyler: it is. it is. lemonis: as the finance person, you're the steward of the assets, which includes knowing what's there, how much it is, where it's moving, how to track it. how do you actually do a physical count? matthew: we did count, and it was a little messy 'cause we don't bar code. lemonis: but you need bar coding so you know what the hell you have. skyler: that'd be great. lemonis: can you guys pull the different products you have,

so i can just understand... matthew: sure. so, let's start with a screen protector. lemonis: okay. matthew: $20 retail. lemonis: $20 retail to the consumer. what are you wholesaling it for? matthew: $10. lemonis: and what does it cost you to make? matthew: $1.75. lemonis: item two. matthew: here we go. lemonis: these wallets. what do you call these? matthew: pockets. lemonis: pockets? matthew: they wholesale for $7, and they retail for $15. lemonis: what does it cost you to make? matthew: probably $2.25. lemonis: okay. what's number three? matthew: number three would be the rings. it sticks on the back of your phone. you can use it as a stand. our cost for these is $1.95. lemonis: wholesale for... matthew: $7. lemonis: and retailed for... matthew: $15. lemonis: okay. matthew: then, you have your case. our cost -- $4. wholesale for $14. lemonis: $14? matthew: retail $32. lemonis: okay. this is a nice case. matthew: yeah. thank you. lemonis: i like it. it feels good in my hand. skyler: it's got, really, the good balance of thickness and protectiveness that doesn't actually bother you. lemonis: my phone actually feels lighter. so, i'm gonna throw my phone on the ground. matthew: 4 feet. skyler: yeah. lemonis: if it breaks, you're buying me a new phone.

matthew: sure. 4 feet. lemonis: so, 4 feet? matthew: why don't we do 10? not guaranteed on that. lemonis: well, that was 5, so... matthew: pretty good, right? lemonis: yeah, and of the four skus, how much business did you do in the last 12 months? matthew: well, last year, we did 1.7. lemonis: $1.7 million? and of the 1.7 million, make money? skyler: no. matthew: no. lemonis: no? matthew: loss. lemonis: with those kind of margins? skyler: no. lemonis: if $1.7 million was the amount that went through the till... ...what was the total margin that went through the till -- 50%, 60%? skyler: no, it was about 60 percent. lemonis: okay, so, it's a million 20 in gross profit. is there a ton of overhead that i'm not seeing? skyler: about $1 million overhead. lemonis: okay. and so, you broke even? skyler: it was a small loss for the year. lemonis: how much? skyler: 70 to 90. lemonis: okay. so, a million one in overheads. matthew: and at the same time, we're in debt. lemonis: who started the business? you did? charlotte: he started it, but i was there from inception, really. lemonis: how did you guys know each other? charlotte: we went to usc together.

lemonis: ah. matthew: we were dating. lemonis: oh, interesting. matthew: yeah. lemonis: not dating now? charlotte: not dating. matthew: not dating now. lemonis: and then, who put money in to start the business? matthew: i did. lemonis: all by yourself? matthew: yes. lemonis: and how much did you put in? matthew: i don't even know the exact number -- maybe, roughly, a half a million or something like that. lemonis: how do you not know that number? it's kind of like not knowing people's names. those are two things you should know -- your employees' names and how much money you put in the business. and how did you end up with a 90% and 7%? charlotte: oh. matthew: oh. charlotte: so, the 7% comes from, like, actual funds that i put into the company. lemonis: how much money did you put in? skyler: more than $250,000. matthew: keep in mind, this was much later. this was, like, in the last 6 months. lemonis: who cares when it was? $250,000 you put in? charlotte: well... matthew: well, also, we got another $350,000 loan that was given to us at the lowest interest rate possible as, like, a gift without being taxed. lemonis: by who? charlotte: my dad. matthew. yeah. it was really nice. [ laughs ] lemonis: so, let me just recap for you. you put in $500,000 -- super admirable starting a business. charlotte comes around.

she's like, "i'll put in $250,000." you're like, "great. you can get 7 percent for that." and then, after that, you need more money. and so, you call your dad. "how much do you need?" "$350,000, "taking the total to a total of $600,000 -- coincidentally, more than he put in. and you still have... skyler: seven%. charlotte: mm-hmm. lemonis:...7%. skyler: yeah. lemonis: and then, how did you get 3%? skyler: just for the immense value i provide to the company. lemonis: okay. i'd like to spend a little bit of time with you. charlotte: sure. lemonis: and so, i'll just -- we'll just chat in your office. charlotte: oh, sure. lemonis: all right? charlotte: sounds good. lemonis: okay. so, is this where the design magic happens or starts? charlotte: it is. lemonis: and so who does the designing? charlotte: sunshine does. lemonis: that is your name? sunshine: that is my name. lemonis: that is freaking awesome, and so, who comes up with the artwork? sunshine: i would say charlotte, mostly, and then, we kind of tag team. charlotte: i mean, we do work together really closely. we usually, like, look at other products and other packaging. lemonis: ooh, i like that one. that is sick.

sunshine: oh, thanks. lemonis: how come you only do stuff for women? they're nice cases, but it doesn't always have to be bubble gum with unicorns. this could be something unisex. charlotte: yeah. lemonis: you know, i'm not that surprised that the company is skewing female. we know the female consumer makes up more than 50% of the marketplace. but i'd like to see some level of balance. it feels like, maybe, there's some opportunity. lemonis: and so do, you guys start with a color board of, these are the type of fonts we want to work with, and these are the type of imagery we want to work with? charlotte: honestly, the second we get assigned to it, we're already behind schedule. lemonis: and who's making it fast? charlotte: matthew. sunshine: yeah. charlotte: he's very, like, impulsive. lemonis: does he listen? charlotte: no. not very well. i mean, a lot of times, we just do what needs to be done, even though he doesn't want us to. lemonis: i don't ever fault the owner of the business for wanting to be involved in the different steps. but if the company is gonna grow, you have to be able to hire people and respect what they're doing and not break their deadlines. because, ultimately, what you're gonna do is, you're going to break morale, and once morale breaks, particularly in the design department,

there goes your creativity. are you eric? eric: yeah. i am. lemonis: eric, i'm marcus. eric: nice to meet you. lemonis: so, do you run the whole print shop? eric: yeah. lemonis: what's the capacity of the shop? eric: on a good night, i would say we could get about 600 cases. lemonis: and so, that's a pretty big number. eric: yeah. lemonis: i'm impressed with everybody i'm meeting at the casery. you handle all of the online imaging? xavier: yeah. lemonis: and you did all of this? xavier: yeah. lemonis: this is one of the best flip books i've ever seen. xavier: thank you very much. lemonis: matt may not know the names of his employees, and he may not know how much money he put in, and he may not be generous with his equity when somebody else puts in a lot of money, but he has hired some good people. how'd you guys meet? skyler: honestly, i just applied through the usc career board. lemonis: is that where you went to school? skyler: yeah. i was a 3-year graduate. lemonis: wow. skyler: yeah, so i'm... lemonis: it's not like you've been out of... skyler: i'm 23. i run the office day-to-day. you know, matt is not here most of the time, so... i found the suppliers. lemonis: you do? skyler: yeah. and i think that matt is really overconfident

with a lot of his business knowledge, and thinking that he knows what's right always, and so, that, kind of, in combination with charlotte being kind of uncertain of her business knowledge, it puts us in a situation that is, financially, really poor for the company, you know, because we're not profitable every month. lemonis: you have a pretty good head on your shoulders for being out of school for a couple years. skyler: thank you. lemonis: all right. let's go look at the financials. what do you say? skyler: sounds good. lemonis: all right. ♪♪ okay. skyler: all right. so, this is the cash-flow estimation. here is the profit and loss, and the balance sheet. lemonis: so, you go through these expenses. "advertising and promotion -- $110,000. education and training." what's that? matthew: that would be, like, any sort of personal development or coaching or things like that, too. lemonis: who's being coached for $27,000? matthew: i took a course last year. i started taking on, like, meditation and being, like, taught about that. so, it really changed my... lemonis: why would the business pay for that? skyler: i mean, there's so many personal expenses in here. lemonis: your personal expenses? skyler: matt's personal expenses. matthew: he's talking about mine. 'cause i wasn't paying myself salary, so a lot of things did probably get grouped in here

that probably shouldn't be. lemonis: does it bother you that his personal expenses are in the business? charlotte: only because it's, like, not quantifiable. like, we have no idea how much you've been, like, "paid." you know what i mean? matthew: because i wasn't paying myself a salary. so, if i pay myself a salary, it would've been fine. so, that's what we decided to do, marcus. so, i am now officially on payroll. so, i didn't pay myself for the 2 years before that. i still didn't want to take a salary to any capacity, so i charged, literally, what i had to. lemonis: let's go through the p&l. "revenue of $1,798,000. gross profit of 1,102,000. total expenses of $1,129,000. $27,000 loss." add depreciation in -- $66,000 -- it's a $93,000 loss. skyler: yeah. lemonis: how are you funding that loss? skyler: we are not funding it. charlotte: we're not. skyler: it is going unfunded. matthew: but that's not the track we're on. you can see that as the growth has gone up. charlotte: but we don't have money to pay the $93,000. matthew: that's correct. right now, we're not... charlotte: you got to wrap your head around that. matthew: oh, i do. also wrap your head around that i did $500,000

in sales this month, and it's gonna keep going up. we're going to do $5 million to $10 million this year. money is of no issue. lemonis: matt, i get all that, and i can sense you're getting frustrated with the three of us. matthew: i get frustrated because these two are not on the same page with me, as you can tell. we're doing international distribution. we have distributors hounding us. we've got the capability to do massive numbers. lemonis: your assets and your liabilities aren't far apart from each other. matthew: yes. lemonis: and your earnings are not positive. and that's what they're freaked out about. matthew: oh, i got that. lemonis: and when she says to you, "you have to wrap your head around that," she's not trying to insult you. she's saying, "you need to just change your thinking a little bit." to lose $93,000 on a product that you buy for $1.50 and sell for $7 is not so great. but you guys took a very simple concept -- a cellphone case -- and you made it attractive. $2 million in a very short period of time is a hell of a job. so, i'm gonna make an offer. i want to invest $700,000. i don't want to invest a penny more than that, 'cause i don't think the business needs it.

this business needs to be working-capital rich and debt-free. and it needs to understand where it wants to distribute, who it wants to distribute to. and it could have multiple identities, because the one thing about this particular product is that everybody in this building is a consumer of it, as well, and they have their own perspective. you should make products for more than just iphones because not everybody has an iphone. matthew: i know. lemonis: what's important to me is where i see the value of the business today. i don't see the value, probably, as high as you do. and so, for that $700,000, i would want 41% of the business. matthew: that's a very high percentage. lemonis: it's huge. matthew: together, you would have 51% combined, and, like, you guys could overturn me. lemonis: i'll also buy the loan out that her father has, and i'll put a longer term on it, so she doesn't have to call her dad and tell him that he got screwed. matthew: well, look at what we were able to accomplish with me leading it. we went into the most oversaturated market in the world, and we are killing it. trust me to keep 51%. go down to 39%.

lemonis: no. not a chance. you have put in the least amount of money of the three of us, and you'll still be the largest shareholder. like, that, to me, seems odd. matthew: i got that. and, like, i steer us well. are you willing to move at all? lemonis: no. matthew: well, i don't know. i don't know. it's tough. lemonis: if your business is in trouble and you need my help, log on to theprofitcasting.com. ♪ ♪

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and you'll still be the largest shareholder. like, that, to me, seems odd. matthew: are you willing to move at all? lemonis: no. matthew: well, i don't know. it's tough. charlotte: i mean, i think you know how we feel about it. i think it's great in so many more ways than the money. matthew: i don't like the idea of being less than 51%. and, like, now you guys could overturn me. now, i'm stuck. charlotte: but that's how we are right now. matthew: i don't like that. charlotte: we're stuck because you're making this, like, your decision. skyler: there's just so many situations that make the percentage of ownership irrelevant in the context of, how much profit did you actually take in from the business. ♪♪ matthew: i'm...yeah. all right. all right, marcus. welcome to the company. lemonis: all right. thank you. so, a little twist. matthew: all right. lemonis: i'm willing to double your equity and double your equity, but i have to control your vote. matthew: so, he gets full control. lemonis: it isn't about control. matthew: all right.

lemonis: it's about fairness for me. i want them to be able to have a voice. if you want to do $9 million in trade shows, and the two of them are, like, setting the alarm off... matthew: yeah. lemonis: ...i want to be able to stop you. ♪♪ so, do we have a deal? matthew: we have a deal, marcus. welcome to the casery. lemonis: thank you. ♪♪ what's the good word? all right. let's get everybody together. okay, normally, i give everybody a run-down of exactly what the heck is happening, but you want to tell them the deal? matthew: marcus and i and charlotte and skyler have made a deal. lemonis: how much did we invest? matthew: $700,000. so, he's now a partner in the business. i own 49%. charlotte owns 14%. skyler owns 6%. lemonis: oh, hold on a second. matthew: and marcus owns 31%. lemonis: come here. i'm sorry. okay, can you say that one more time? matthew: yeah. 49%, 51%. lemonis: but you're still the largest shareholder... matthew: correct.

lemonis: ...and still the leader of our group. but i wanted to ensure that we make decisions differently going forward, and that every department sees value in themselves, and people can be creative, and that we're not changing things every 5 minutes. the $700,000 is gonna go in to solve a number of issues -- design new packaging, come up with new ideas, put the warehouse in order. we know we need to make more products, and we know we need to talk to people before we make them. matthew: we're spending a ton on marketing expenses, and our sales are going way up... lemonis: including the trade shows... matthew: yeah. lemonis: ...which we don't know for sure are always profitable. i can't promise you that everything the company does going forward is gonna be for a female teenager. xavier: sick. mason: that's valid. lemonis: did you see that reaction? matthew: yeah, marcus, that's not a good idea. these guys don't buy cases. xavier: if i could get a cool case for my phone, i would, from the casery. i would get it. lemonis: me, too. matthew: dude... lemonis: you don't know everything about everything. matthew: i don't. i know a lot about the demo. lemonis: but you like to speak like you know everything about everything. and that's the one thing

that you have to change in working with me. we should just be open-minded. this is a big world. we're ready to go. let's go. you guys can boogie. matthew: that's it. ♪♪ lemonis: what's happening? charlotte: hey, how are you? lemonis: how are you? it's great seeing you. i wanted to take the team to do a little sidewalk focus group outside of a college campus -- ucla -- where everybody's young and hip and fun, and see what they have to say. i know this is your target market, which is why i brought you to this corner. but you said to me, vehemently, that this is not a product for men. matthew: yes. you want to test that? lemonis: so, bring whoever you want. let's get feedback from everybody. free cases! give us your feedback, we'll give you a free case. want to take a look at these cases? see what you think of them. charlotte: so, we're the casery. we make phone cases and phone accessories. and we're just kind of here getting some feedback. man: i was gonna say, it's very feminine. it's doesn't seem like you're speaking to me, as a customer.

lemonis: if you saw one you liked, would you be open to buying it? man: yes. lemonis: now, is this an android phone? man: yes. lemonis: okay. man: you don't have the androids, do you? matthew: no. charlotte: we get that feedback a lot. man: for me, it looks a little bit more... i don't know if this is, like, a pc thing to say, but it looks more feminine. matthew: and would you ever consider getting a new case? man: if it was a cool design, i would replace mine. matthew: you would? lemonis: do you buy cases? lemonis: look, i know the bulk of the cellphones in the marketplace are iphones. the data supports that. but not all of them are. and i know that women buy cellphone cases more than men, but that doesn't mean that men don't buy cell phone cases. your current business strategy is too limited. charlotte: true. lemonis: were you surprised by how many men organically came over? no more blanket statements without all the research and all the facts. charlotte: i guess that would mean, right now,

doing fewer skus for women... matthew: not necessarily. charlotte:...and changing one of those over to be more gender neutral or... matthew: not necessarily. we did have men. they were interested to some capacity. we're not sure exactly why, but they did come in, and wanted to talk about phone cases. lemonis: it's like... matthew: well, you're making assumptions off what we saw. lemonis: i didn't make any assumptions today. what i really learned at the end of the westwood experience is that matt's not gonna listen to anybody other than himself. he's not even willing to be open-minded about getting better. just think about the market in totality. i'll see you back at the office? charlotte: cool. matthew: okay. lemonis: okay? matthew: sounds good. charlotte: sounds good. lemonis: okay, guys, thank you. matthew: see you, marcus. ♪♪ lemonis: have you not been here before? matthew: never been to cooper. lemonis: oh. matthew: i've been to the other one, you know, the la mart? lemonis: this is far more contemporary. matthew: that's what i've heard. lemonis: trade shows have been one of the single biggest investments for matt and the casery, but they don't seem to get much out of them, and i want to really understand why.

so, today, we're at brand assembly. it's a trade show for high-end fashion brands. matt's had a sales rep there for 2 days now, and so, i want to check in with her directly and get honest feedback about what she's seeing and how she feels about it. how's it going here? angela: it's good. it's a little bit slower, just 'cause we're newer. we don't know all the buyers yet. lemonis: how much did it cost to come here? angela: i actually don't know that information. lemonis: okay. angela: yeah. lemonis: and so, how much do you have to sell to make it worthwhile? angela: i actually don't know that information, either. lemonis: okay. angela: yes. lemonis: so, how much do you think you'll do throughout the show? angela: so far, with the numbers that i've been getting, i think we're gonna do about $5,000. lemonis: $5,000. angela: yeah. lemonis: are your margins 90%? matthew: margins are about 66%, 67%, something like that. lemonis: so, let's do the math. skyler: 5,000 times 67. so, 3,350. lemonis: and the cost to fulfill the orders? skyler: a hundred bucks. lemonis: okay. what did it cost to come to the show? skyler: $3,800. matthew: thirty-eight. lemonis: just to pay for the show? skyler: just the booth space. lemonis: okay. and then, free giveaways? skyler: i don't know how many cases we're giving away, but, maybe, 200. lemonis: so, let's say 200.

how much do they cost? skyler: two. matthew: $2. lemonis: okay. so, that's $400. skyler: then, we've got the 4-day show, so, a per diem of $75 a day. and then, we've got angela's time. matthew: $1,200. skyler: you know, she's here 4 full days. lemonis: so, the booth rental, the giveaway... the per diem... and labor... skyler: yeah. lemonis: ...to another $100 in materials... so, now, it's $5,900. so, basically, you lost almost, like $2,600 coming to this show. matthew: yeah. skyler: right. lemonis: like i've said, i am all for trade shows. but if you're losing money in doing them, you're either doing it wrong or you're going to the wrong ones. so, no more shows without a plan, at all. there's got to be a process to make the decision of whether to go or not -- understanding the type of customer you're going to have, what the presentation is gonna look like. if it was just presented different. change the packaging completely. matthew: yeah. well, i don't know about that, but everything else. angela: i think it would do better if it was in a different packaging, just 'cause here, it's not selling, 'cause this audience thought, maybe, it wasn't right for their store.

lemonis: look at this. this is not your customer. matthew: no. it's not. lemonis: these are high-end bags. this feels like a show that you went to with no research. start designing new packaging for different audiences. matthew: well, i don't know about that. i'm not sure it's the answer. i don't think you are, either, though. i think we need to actually test it and know. and i feel like we're fighting back and forth. like, it's upsetting. lemonis: let's roll. thank you. angela: yeah, thank you. lemonis: thanks for your honest feedback. [ indistinct conversation ] matt is resistant to every single thing i suggest. and i can't imagine that tweaking the packaging should get this sort of reaction, so i need to find out what's actually happening. matthew: i would like for us to be more of a partner. lemonis: explain it to me so i can just, maybe, change my approach. matthew: okay. i think it's unfair, 'cause you're taking control of the company that i have control of, that i put everything into -- my whole life and everything. and i'm not accepting a lot of things you're doing. and the team turned against me when you came here, and they're ganging up on me. lemonis: your insecurity is getting the best of you.

matthew: it's upsetting. it's... skyler: what's upsetting to me is because it's, like... matthew: like, these guys are so excited to work for you because they gain twice, so you have... lemonis: working with me. matthew: ...like, "okay, good." you're doubling both their equities. skyler: and the thing is, you keep saying that, but you didn't do that. matthew: i literally did with charlotte. we sat the [bleep] down. lemonis: you don't have to get that crazy. matthew: it pisses me the [ bleep ] off. i've given him equity in a company that i value incredibly high, that i put everything into. know what you're talking about. we're rewriting the contract right now as it goes. you get my perspective a little? matthew: well, now these guys have it that they can do whatever the [ bleep ] they want. guess what? that's not [ bleep ] true. if i'm acting c.e.o., i am still in control of this company.

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click or call for a quote today allstate matthew: it pisses me the [bleep] off. matthew: i've given him equity in a company that i value incredibly high, that i put everything into. know what you're talking about. you get my perspective a little?

'cause i actually get what you're saying. lemonis: i do get your perspective... but i don't necessarily understand it. you're, like, inside your own head too much, and you feel like everybody is out to get you, and they're just not. but i don't know how to help you cope with it other than, you have to just work through it. matthew: try not to be an [ bleep ] either. lemonis: i'm not an [ bleep ] to you. matthew: you were day one. lemonis: was i an [bleep] to you? matthew: no, only to me. lemonis: only to you. matthew: right? lemonis: yeah, maybe because you didn't know your employees' names. i was a little bothered by it. come on. we're going this way. matthew: yeah. ♪♪ lemonis: what's happening? charlotte: hi. lemonis: it's been hard to get anything done with all this drama, but i decided to share some good news i received in telling them about a killer opportunity. i have a relationship with t-mobile, and they're one of the biggest retailers of cellphones and cellphone accessories nationwide. jon: just last year, we opened up 1,500 new stores.

lemonis: and they're open about the idea of us pitching our new product lines to carry in their stores across the country. lemonis: we would like permission to come to seattle, bring a full presentation, and we're going to bring you 12 to 18 designs that are exclusive to you, that we will not put in the market. with thousands of stores in the u.s. alone, an order from t-mobile would result in millions of revenue for the casery. but before a new line gets created, i want to make sure there's an inventory system in place to account for all of it. so, i've put skyler in charge of executing that. all right. is the color tape indicating something? skyler: yes. so, we've color-coded everything red, green, blue by size. lemonis: high-five on that, brother. it looks really good. okay, meet jason. i've also connected the casery with public pool, a company that connects brands with designers from around the world to come up with new and fresh ideas. jason: these are some designs from a public pool designer that we think is a good direction to go in. lemonis: the current demographic is women 13 to 35,

and in order for this company to be successful, it has to be gender neutral. xavier: i really like this one, for sure. charlotte: i really like this one, too. i think this is really cool. i think that some guys would actually wear that. jason: so, this is just the first step in a filtering process to get down to your final designs. lemonis: jason and the team at public pool will help charlotte have additional hands creating things so that all the burden doesn't fall on her. this is, like, a sick opportunity. charlotte: yeah. this is really cool. lemonis: all right? charlotte: very cool. lemonis: thank you very much. charlotte: awesome. yeah. thank you guys. lemonis: thank you guys. ♪♪ what are you frustrated about? skyler: i don't know. it's been a long time. lemonis: want to go in here, and we'll talk, wait for everybody? skyler: sure, man, that's fine. lemonis: hey, charlotte and matt, come on back. i got a call this morning from a very frustrated skyler and charlotte, wanting to meet immediately to discuss one thing -- the lack of progress. skyler: honestly, it's a little frustrating 'cause it kind of feels like

we're avoiding getting the work done. lemonis: are you upset with matt? skyler: a little bit, definitely. lemonis: so, this is just, like, we shouldn't, like... let's just -- right to the point. like, you weren't gonna be here today, right? matthew: no. i had a 2-day training on scheduling. lemonis: on scheduling? matthew: yes. lemonis: what does that mean? matthew: so, it's a program that is used for people who have, like, incredibly busy lives in order to, like, live in empowering context through rescheduling. so, but really, at the end of the day, it allows you to get more done in less time and be specific with what you can get done, which is a good thing. charlotte: yeah, but you do a lot of bull[bleep] trainings and courses. lemonis: how much is it? matthew: $700, 675. lemonis: and who pays for that? matthew: the company. skyler: i didn't even know the company was paying for it. charlotte: i didn't know the company was paying for it, either. matthew: you did. lemonis: do you keep track of everything that's been put through the company that you don't think should be? skyler: i keep an eye on it. lemonis: do you have a total? skyler: $150,000 to 200,000. lemonis: of money that should not have gone through the company? skyler: yeah. matthew: well, i wouldn't say that. lemonis: but he did. matthew: well, now, these guys have it that they can do whatever the [ bleep ] they want,

and you can make decisions that go against me. guess what? that's not [ bleep ] true. if i'm acting c.e.o., we go with my decision until you vote me out. i am still in control of this company. matthew: what i said is, "put me on payroll right now." lemonis: right. matthew: but i didn't have it that was going to cover all my costs. i don't think anyone did. lemonis: but what your living expenses are are irrelevant to the company. matthew: but my living expenses need to be paid. lemonis: it doesn't work that way, matt.

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that they can make decisions that go against me. guess what? that's not [ bleep ] true. if i'm acting c.e.o., i am still in control of this company. it's just, like, still respect my decisions and let me lead the company. don't have this as some, like, "now i can be a dick." charlotte: you can't take that as us being dicks, because we're calling you out on the last 3 years of bull[bleep]. skyler: i mean, the thing is is that you're still being completely self-centered about it. it's all about you. it's all -- you know, it's all your authority. you're all afraid of losing your power. matthew: i'd like you to trust me more.

charlotte: you have to earn that. matthew: i got that. charlotte: and that's what i don't know that you understand. matthew: i got it. lemonis: the two of you have to also understand that it's not "gang up on matt and beat his ass" day. it's "hold him accountable, make him better." skyler: totally, yeah. lemonis: 'cause i'm investing in you guys. skyler: okay. lemonis: i think if the people here feel that there's progress, regardless of who's calling the shots, they'll want to move with you. okay? all right. okay. skyler: thanks. lemonis: god, you need a hug or something. charlotte: all right. lemonis: see you. charlotte: thanks. lemonis: please, let's get this t-mobile thing moving, okay? charlotte: yes. ♪♪ lemonis: my man, what's happening? skyler: hey, marcus. lemonis: how are you? skyler: pretty nice. lemonis: good to see you. matt gave me the impression that he's now on payroll, and that he doesn't run his expenses through the company anymore. but based on our last meeting, that doesn't appear to be the case. and so, i asked matt and skyler to come down, and sit down, and let's go through these financial reports page by page, line by line, to really understand what's happening.

okay. let me just look at this real quick. jackie's bakery, jackie's bakery... matthew: mm-hmm. lemonis: ...balloon coffee... ambar cuisine of india... matthew: uh-huh. lemonis: you got, like, weight watchers... car wash... matthew: yep. that's mine. skyler: you know, it's like, we said, "matt, we're putting you on payroll," and then, you know, you pay rent through the company, and so, we take your off payroll. matthew: what i said is, "put me on payroll right now." lemonis: yeah. matthew: and it was like, i can start paying for a lot of stuff myself. but i didn't have it that was going to cover all my costs. i don't think anyone did. lemonis: but what your living expenses are are irrelevant to the company. matthew: but my living expenses need to be paid. lemonis: it doesn't work that way, matt. what if the business doesn't have the money to pay it? matthew: it does. we're making millions. skyler: and that, also, is the attitude that pisses off charlotte so much is, like, "oh, there's no way i could possibly reduce my living expenses no matter what." lemonis: the challenge everybody has with you is, the expenses are not controlled. and the assets, they feel like you just dip in and take what you want. unfortunately, when you own a business, whether it's 90% or 100%, when the business doesn't make money, the owner usually ends up taking nothing... because there is nothing. matthew: right. lemonis: i don't think anybody objects to you making a living,

just as long as you're not making a living and taking money out of the company. let's make sure that we have a clear understanding how the expense control is gonna work, and that everybody's payroll is appropriate and commensurate for their job. and then, we're gonna look at all the expenses and say, "holy [ bleep ], you better sell 20 million, or this place isn't gonna make it." ♪♪ look, so, i got this random call from matt telling me that there was some emergency cash crisis, and he essentially said to me that they didn't have money to pay bills and to pay vendors, which is surprising to me, because last week, he told me the company is at an all-time high. so, there's a cash problem? i have to be honest -- i don't understand it. i don't understand what happened. matthew: it's a cash-flow issue, a cash-flow crisis, if you want to call it. skyler: for me, the problem is that our inventory is never sold before we have the inventory payments due.

basically, the second we get one more bill, and we don't have that inventory shipped to us and liquidated before we get the bill, we're in the crisis again. lemonis: i don't understand because the day we met... matthew: this is the state we've always been in. lemonis: ..."we're doing great." matthew: we are doing pretty well, and we're also having a cash problem. lemonis: do you see why i'm confused, though? when somebody says to me, like, "things are awesome. we're gonna do $10 million this year." and right now, you're saying to me, like, "holy [ bleep ], we're out of business." skyler: it's not looking good. we spent 450,000 on trade shows, and it's like, we've got all these bills due for our suppliers that we were banking on the shows doing a lot better than they did. lemonis: the day i met matt, he said he personally sold $500,000 worth of product, and that the company was gonna do between $5 million to $10 million that year. well, apparently, that wasn't true. and whether matt was lying to me or to himself or to both of us, it doesn't seem to be panning out. now, the way the casery has historically ordered product from their factory is based on projected sales.

and that product's come in, and now, the bill's due. what's the cash need in the next week? matthew: $150,000 that would cover us right now. lemonis: so, i'm gonna give you an immediate band-aid of $150,000? it sort of takes the immediate pressure off. but i want a dollar a product for the rest of your life. [ suspenseful music plays ] matthew: no. that's really high, 'cause you know that we need it now. lemonis: no, in fairness, matt, you definitely presented the business differently than what actually exists today. matthew: i don't think so. charlotte: no, i mean, i think that's the case. i think you hyped it up a lot. you're [ bleep ] overselling everything. matthew: but to be honest, i don't necessarily agree. i gave you all the numbers specific. lemonis: i don't think so. matthew: this is really unfair. like, i want... lemonis: it seems unfair that you misrepresented the business. matthew: i did not. lemonis: you did not misrepresent the business? matthew: i did not. i gave you exactly the numbers. lemonis: you did not sell me a shiny piece of [ bleep ], and then tell me now, a month later, that it's different? you did not do that? matthew: i told you exactly what i knew.

lemonis: yes or no. you have disrespect towards her, and disrespect towards him, and they've done nothing but eat from a bag of [bleep] since i met you. ♪ ♪ matthew: to be honest, i gave you all the numbers specific. ♪♪

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lemonis: i don't think so. matthew: this is really unfair. lemonis: it seems unfair that you misrepresented the business. matthew: i did not. lemonis: you did not misrepresent the business? matthew: i did not. i gave you exactly the numbers. lemonis: you did not sell me a shiny piece of [ bleep ], and then tell me now, a month later, that it's different?

you did not do that? matthew: i told you exactly what i knew at the time. lemonis: yes or no. matthew: yes. lemonis: okay. now, you're going to pay for selling me a piece of [ bleep ], so, it's not that i'm trying to extract or exploit. i'm trying to protect myself. i have to buy some schmuck insurance. i don't know if i trust your presentation of the reality. matthew: what can i do? lemonis: just don't exaggerate. that's all. matthew: all right. lemonis: you know the business. you are super talented, but you scare me. matthew: fair enough. lemonis: would you like me to wire you 150,000 tomorrow? do you have your wire instructions? skyler: yeah. i'll print it out. lemonis: that's gonna pay the vendors. charlotte: we really all appreciate that. lemonis: okay. charlotte: thank you. lemonis: okay, guys. i'll see you soon. ♪♪ well, hey, guys. aimee: hi, i'm aimee. nice to meet you. lemonis: i brought the team to jd customs -- it's a company i invested in a year ago -- to build the display that would be specific and unique for t-mobile.

aimee: so, we wanted to come up with something a little bit different. charlotte: i really like the pink outline. it's a really cool way to include the pink without it being too much. lemonis: it gives us a chance to go into a professional presentation looking like we've properly planned. thank you, guys. recently, charlotte's been really working on expanding the company's revenue by designing new cases for all genders and all age groups, as well. lemonis: these designs are awesome. the line felt limited, and these are kickass. ♪♪ skyler: hey, marcus. charlotte: hi. lemonis: hey, guys. charlotte: how's it going? lemonis: how are you? we're a little over a week away before the t-mobile presentation, and i've asked the team to brief me on where we are in designs and what exactly their strategy is gonna be for the meeting. i think, ultimately, i thought we would be presenting three distinct boards we would print a small quantity of, to say, "these are the kinds of things we can do, and this is how we see the pairings, here." charlotte: we just don't really have a sales pitch.

like, what's the actual breakdown of the, like, "look, this is what we feel like is gonna work for you. we can make it happen in x, y, z." skyler: how many designs are we bringing on mock-ups? and, like, let's start placing them in. lemonis: i don't mean to be... like, wouldn't you be giving them this direction? matthew: yeah. yeah. skyler: it's like, we're not getting any direction. you didn't even come to the meeting about it this morning. it's like, you realize the meeting is in 10 days? matthew: try not to be so hostile. this doesn't work. like, we can't kill each other off. like, we talk... we have to be a team if we're going to do this. skyler: yeah. so, like, join the team. charlotte: seriously, this has not been... matthew: or it's worth what it is. charlotte: ...near the forefront of your mind. lemonis: and i think it's a respect issue, that, people feel like they're working, and you're just kind of not showing up. the house was burning down a week ago, and so, $150,000 came over. bills got paid. matthew: no. we didn't use it. so, what i went in and did is, i went in and looked at our finances in detail, because i didn't trust everything being presented to me as it was by skyler. 'cause you're doing so much... lemonis: you're saying he lied? matthew: no. i think he just didn't get the whole world of it all. so, i took it over.

lemonis: why is it that you hate having partners so much? matthew: you guys are very upset, and you don't want me to come in and lead you. charlotte: no, we don't. matthew: yeah. charlotte: i don't. i just think we need a leader that puts the company first, and not himself. matthew: i know. lemonis: you have a mini revolt on your hands. matthew: absolutely. there's been one since at least i met you, and it became a lot more clear with what's happened in the last 45 or 50 days. lemonis: what happened in the last 45 to 60 days is that you started to feel like you weren't gonna be able to do what you want and say what you want and spend what you want, and that you were starting to feel like you were going to be accountable to a group of people. and you don't like that. matthew: it doesn't work for me to work with the deal as it is. lemonis: why is that? matthew: where i'm not maintaining the majority ownership. i just want it to be my company. lemonis: and you want all of us just to get in the row boat, and hopefully it works out? matthew: not necessarily. lemonis: well, what are the other alternatives? matthew: i want to offer three options. lemonis: what are your options? number one -- you want to have full control. matthew, option two would be buy me out. lemonis: what's option three?

matthew: no deal. lemonis: so, option one was full control. matthew: yeah. lemonis: that's a "no." option two is buy you out. that's a "no." option three is no deal, and you give me my $150,000 back. that's a "yes" because you're a smug prick. and you have disrespect towards her, and disrespect towards him, and they've done nothing eat from a bag of [ bleep ] since i met you. for exclusives, extras and business advice, visit theprofit.cnbc.com.

lemonis: so, option one was full control. matthew: yeah. lemonis: that's a "no." option two is buy you out. lemonis: that's a "no." option three is no deal, and you give me my $150,000 back.

that's a "yes" because you're a smug [ bleep ]. and you have no respect for your people, and they've done nothing but eat from a bag of [ bleep ] since i met you. matthew: what do you want to do? lemonis: you gave me my ultimatum. matthew: no. i'm for a negotiation. lemonis: we already negotiated. skyler: that's what you don't understand is that, you're putting the ultimatum on everyone. it's not a negotiation. charlotte: you can't just keep saying, like, "i'm breaking the deal. the deal is not happening." lemonis: it's obvious to me that matt is trying to weasel out the deal. but he doesn't want to give up control. he doesn't want to be accountable. he doesn't want to be told that he can't spend the company's money, and he doesn't want to show up to meetings. and he knows that's not gonna fly. it's selfish behavior, not really caring about how his other partners feel or how the rest of the employees feel. matthew: so, what can we do? lemonis: we can shake hands, and i can wish you luck, and you can give me my money back. i can't function, matt. i think the challenge that i have is, i can't function. and i think you need to learn this lesson in how you treat other people. you can't agree to something...

matthew: yeah. lemonis: ...and then change. you're not a people person, and that matters to me more than anything. i can't be on this roller coaster with you. matthew: i understand. lemonis: okay, buddy, thank you. i'll swing by and pick up the check, okay? thank you. we'll see you around. skyler: thanks, man. lemonis: thank you. people always wonder how the three ps actually apply to a business, and here's how they actually apply to the casery -- don't disrespect your people, have a product that's relevant to the marketplace, that it appeals to as many people as it can, and participate in the process to ensure that the business is actually functional. from my perspective, matt really ruined this opportunity for all of us. and i'm disappointed that i have to leave the team, and for everything to unravel this way. [ phone ringing ] hello? and then, 2 weeks later, i get a phone call. hi. good. what's going on?

oh, really? i didn't expect to hear from charlotte, but i'm open to hearing what they have to say. i'd love to sit down and talk about helping you. bye, bye. maybe this isn't the end after all. ♪♪ lemonis: tonight, for the first time ever on "the profit"... [ indistinct conversations ] lemonis: ...we'll see a business get built... xavier: oh, geez. lemonis: ...from the ground up. i think it's going to take $2 million initially. and you may even recognize these two. charlotte and skyler were partners in a business i attempted to invest in in season 5 -- the casery, a cellphone accessory company. charlotte: oh. lemonis: charlotte headed up the design team and has a great eye... these designs are awesome. ...while skyler oversaw operations and a number of other things. skyler: i also take on the cfo responsibilities. lemonis: that's an interesting crossover. but ultimately, they both reported to matt, the ceo. matt: try not to be an [bleep] lemonis: i'm not an [bleep] to you. charlotte: from day one.