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Glad You Like My Art–But No Photos Please

Posted in Customer Experience & Reviews, DC, Small Business, tagged on September 18, 2017| 3 Comments »

“Hey, no pictures!” the artist barked at the teenage girl, who was maybe 15. “I have signs all over!”

The not-so-prominent sign (singular, not plural, by the way), read “No photos please” with an image of a camera and one of those red circles with a line through it over the camera.

I stumbled into this scene while popping in and out of artist booths at the King Street Art Festival in Alexandria, Virginia. The booth in question featured a collection of ceramic statues, mostly 6-inch tall men, each painted in a single bright color, scaling the walls of the booth with the aid of a metal wire. (I’d have included a picture so you could see what I’m talking about but, in the words of Ace of Base…nevermind.) I’d seen similar statues in the past and they’d always spoken to something in my unsophisticated artistic sensibility, so I wandered in to get a sense of pricing, and see what else the artist had in his collection.

The collection included a bucket affixed to the wall, with a swarm of butterflies arranged to look like they were flying out of the bucket; a wavy line of five or six tiny bicycles, made to look like they were trekking up and down a hilly course; and a few other shapes, such as cats and dogs, that I thought might have looked cool hanging on (or from) the wall in my home office. Hey, it gets lonely in there!

The artist was in the booth answering questions from prospective buyers when, out of the corner of his eye, he saw the teenage girl take out her phone to grab a snapshot of one of the climbing men. She was probably going to post the picture to her various social media profiles to document her experience that day at the art show. I imagine this was not the first booth where she thought to take a picture.

When the artist yelled at her, she meekly apologized and scurried out of the booth, embarrassed. The artist, without missing a beat, continue to talk to more important customers. (I was not included in that group, BTW.)

I thought about the incident over lunch. My initial reaction was that I didn’t fault the artist’s instinct to protect his intellectual property. While colorful statues of the human form (climbing or otherwise) is hardly the most novel artistic work ever conceived (as I said I’d seen similar statues in the past), it’s his work, and he wants to make sure no one else sees it online and copies what he’s doing, thus cannibalizing his potential customer base.

However, here’s where I think he’s in the wrong: 1-Don’t yell at a child that’s not yours unless they’re breaking your statues. A polite warning (“Please don’t take pictures inside this booth. Thank you.”) would have gotten your message across. 2-The young girl was probably going to post the photo on social media because she liked it and thought others might like it, too. Besides her buying the statue, that’s probably the best possible outcome for him. Instead of trying to stop people from taking photos of his art, he might have considered switching out his “no photos” sign for a sign that included any social media accounts or handles associated with his name, art collection, company, or studio. As it was, he didn’t have any cards or contact information, even a website. I believe I heard him say he only sells his work at art shows.

Now, is it more likely that one of the girl’s social media contacts would see the her post and say, “What a great idea for a statue–I’m going to copy his idea and make a huge profit!” or, “What a great idea for a statue–I’d like to buy one!” I’m betting it’s the latter.

Perhaps it’s because I work for Ypulse, a market research company specializing in Millennials and Generation Z, that I often find myself trying to view the world through younger eyes than my own. (At age 35, I’m a “cusper” Millennial, but I tend to identify more with Generation X.)

Many of the other artists had “no photos” signs hanging from their booths, and I don’t necessarily blame them. If someone took a screenshot of this blog post and posted it on social media without attributing it to me–or copied the text and posted it on their own blog–I wouldn’t be too happy about it. But if I made it as easy as possible for people to share my content, while still crediting me, isn’t that my intended result, to have as many eyeballs as possible reading what I write?

I can hardly point to this incident as a bellwether for a larger trend around how young people in 2017 consume art. Nor do I have any insight into whether photos taken at art festivals actually do have a negative impact on lesser-known artists trying to sell their art. For example, is a person less likely to buy a piece of art for their home if they can simply “own” the image by posting it to Instagram? I doubt it, but I suppose it’s possible.

What I do know is that the teenage girl did not intend to bring negative consequence to the artist, but he treated her as if she was single-handedly trying to crumble his 6-inch tall empire. And even though I liked his art, and was strongly considering buying a piece of it just a few minutes earlier, witnessing that interaction was enough to make me walk away without opening my wallet.

Oh and by the way, if I had bought one of the statues, I probably would have posted it to social media. So, what did the artist actually accomplish in the end?

One more thing
The local art league used a smart fundraising tactic at the festival, which I thought was worth an honorable mention. Partnering with a local ice cream shop, they were selling handmade ceramic bowls for $15, which included a free scoop of ice cream on a hot day. Someone at the art league might have a bright future in marketing!

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‘The Profit’ S4 E3 Recap: No Soup For You, Marcus!

Posted in Customer Experience & Reviews, Small Business, TV, tagged , , on December 11, 2016| Leave a Comment »

In this episode of The Profit, “The Soup Market,” Marcus Lemonis visits a Milwaukee-area soup shop.

The store has been reasonably successful, but with grand plans to expand its footprint from 5 stores to 50+, and a co-owner who died unexpectedly, owner and soup chef (“soupier”?) Dave Jurena needs Marcus’s help.

Within a few minutes of stepping inside one of The Soup Market locations, meeting Dave in person, and tasting a few soup samples, Marcus already has a few thoughts. The inside of the shop, he says, looks like a hospital cafeteria. The soups themselves are a little thick, not the light fare he expects when ordering soup. And he’s concerned that the calorie count of these thick soups isn’t posted anywhere, nor does Dave care to know how caloric his soups are.

Marcus also hates the sloppy presentation of the soup and bread on a plate, thinks the bread smells like it’s not fresh, and is concerned the shops aren’t collecting data at the point of sale for which soups sell best and worst. Dave estimates soup makes up about 60% of the shop’s revenue, but doesn’t know what the second-best selling item is.

Marcus asks Estephanie, one of the shop’s young, friendly assistant managers, to step outside to ask her a few questions without Dave hovering. When he asks Estephanie who she reports to, she squirms and says, “Dave…?” It’s obvious to Marcus, and the audience, she’s hiding something. There’s clearly an underlying issue, but it’s above her pay grade. No one can blame her for not getting in the middle of whatever it is. Estephanie grudgingly mentions someone named Grace, but says she’s unsure of Grace’s role at the company.

Next, Marcus pokes around in the kitchen at another TSM location, getting to know some of the other employees including Kevin, who is introduced as the director of operations. Kevin, in front of Dave, mentions Grace as well. Dave quietly says to Kevin, “Don’t mention Grace,” and then tells Marcus Grace will be leaving the company soon. Dave is red-faced and clearly uncomfortable talking about Grace.

Marcus smells something fishy–besides the cioppino. Unwilling to let the Grace thing go, he also asks Mayra the kitchen manager, outside of Dave’s earshot, who she goes to if she has a kitchen problem. “Grace,” Mayra says without hesitation. When Marcus asks if Grace reports to Kevin, Mayra says, “I really don’t know,” with the same awkwardness we saw from Estephanie and Kevin earlier. He revisits the issue Kevin, who describes the relationship between Grace and Kevin as “brother-sister,” and “dysfunctional,” before Dave interrupts them.

Upon visiting a third store, Marcus is confused to see Dave’s wife, Jill, again. He had met her at the first store that morning, but since she’s not technically involved in the business he thought it odd to see her twice in one day. When he asks Dave why she’s here, he says it’s “to support me.”

“Is that really the reason?” Marcus asks. Dave says: “And to keep Grace away.”

When Marcus prods, Dave is as cold as gazpacho and says three or four times, “I’m not going to talk about it. Next subject.” Marcus won’t let it go, and finally Dave says, “I wish you would go. I have no interest in your services,” and storms out.

Marcus reaches Dave on the phone an hour later. Dave explains there was a “blow-out fight” between he and Grace, and they mutually agreed to part ways. Marcus is satisfied, for the time being, and agrees to set the Grace thing aside. For now.

Marcus and Dave go over the numbers together. We see the little cartoon infographic we get every episode, this one specific to increasing the margins on a cup of soup–though Dave himself doesn’t know how much it costs him to make a cup of soup–from 52% to 70%.

And finally, here’s Marcus’s offer: factoring the $85,000 TSM is in debt, Marcus is willing to pay $315,000 for 50% of the business. Before agreeing to take Marcus’s money, Dave wants to know “what that looks like” in terms of how Marcus intends to spend money when it comes to improving the look of the stores, which Marcus hates. Marcus says no, he’s 100% in charge and won’t agree to any such conditions before making the deal. Dave, who pretty much has no choice, agrees. And with a handshake, Dave and Marcus consomme-d their relationship.

Marcus has Dave to bring a few of his soups to a lab to test their nutritional content and, surprising to no one, they are found to be heart attacks in a bowl. (As if this episode didn’t already smack of Seinfeld, the lab scene calls back Jerry, Elaine and Kramer having the “no-fat” frozen yogurt tested.) Marcus suggests tweaking some of the recipes to make them healthier. Dave wants no part of it, suggesting Marcus should stick to business and let Dave stick to soup.

Later, who makes an appearance at the store but Grace. She blows past the counter and walks to the back room. Marcus tries to stop her, pretending he thinks she’s a customer, but he knows what’s up. Her explanation is, “I’m Grace,” and she keeps going. Since Dave isn’t around, Marcus takes the opportunity to ask her what the deal is.

Grace says she is “kinda freaked out, I’m shaking right now.” Grace tells Marcus she is the director of operations–not Kevin–and that Dave requested she be invisible during the episode. She very much still works at TSM and still draws a paycheck. After a little more Marcus-style prodding–he’s like the Howard Stern of small business reality shows–Grace finally says she thinks Dave’s wife, Jill doesn’t trust her, and that she has become a problem in the Jurenas’ marriage, though nothing has ever happened between she and Dave.

The plot thickens–much like Dave’s African peanut soup.

As Marcus leaves the store, Dave’s wife, Jill, is skulking literally around the corner from the store. Is she keeping a lookout for Grace?

Marcus confronts Dave about Grace. Again. Dave says she’s a great worker who really stepped up when his business partner died, and that he developed feelings for her. He says he told his wife about it, and that nothing actually happened between he and Grace. Marcus considers walking away, but decides to power through for the sake of the employees. What a guy.

Marcus forges a deal with a pretzel company to supply TSM with a better bread option. And Dave even agrees to make a healthier soup to appease Marcus. Marcus is simply inspiring, not unlike chicken soup for the soul.

Marcus goes home to Chicago, then comes back two weeks later for the grand re-opening of one of TSM’s locations, having spent $60,000 renovating the shop and installing a point-of-sale system. People are lined up at the door. Dave gives an emotionless speech about how excited he is for the re-opening, and everyone files in for free soup. Dave’s wife, Jill, says she’s very proud of Dave. But wait…

Marcus spots Grace hanging around outside the store. Marcus brings Dave outside to take one last shot at ironing things out between Dave and Grace. He mediates, Dave apologizes, and Grace accepts. But Marcus is still pissed that Dave, against his wishes, excluded Grace from the opening. Marcus is again questioning his decision to partner with Dave. Perhaps he should have chosen salad instead.

Ten days later, while back in Chicago, Marcus gets a call from Grace. Grace says Dave fired her for insubordination, and when she refused to leave, Dave had the police escort her out. She also reveals that two years ago she filed a sexual harassment complaint with the Equal Employment Opportunity Commission after Dave made a sexual advance toward her. While that’s messed up, and Dave is now coming off like a scummy weirdo, I kinda feel like this is something Grace might have mentioned to Marcus a little sooner.

Marcus goes back to Milwaukee to confront Dave and sees that the new menu board, fresh produce display, and POS system are gone. The pretzels are missing, too, and TSM is now selling ice cream.

Marcus, now stewing, questions Dave, who tells him he doesn’t like any of the ideas Marcus implemented. They bicker, but it’s all beside the point. Marcus whips out his trump card, the paperwork from Grace’s EEOC complaint. Dave goes back into red-face mode, says the complaint is “being taken care of,” and that he doesn’t think he and Marcus are a good partnership. Marcus, class act that he is, wishes Dave good luck, shakes his hand, and walks out. After taking about a $100K hit on this failed investment, Marcus may be eating ramen tonight.

“I saw his true colors,” Marcus concludes. “I’m outta here.” I can believe he walked away from the deal. What I cannot believe is that he didn’t even attempt a soup-related play on words to end the episode. Personally, I would have gone with, I ultimately decided that Dave’s bisque was simply not worth the risk.

This was an entertaining hour of TV but it leaves me with one question: had Dave been more flexible and cooperative with Marcus, would Marcus have been willing to stick out the partnership despite Grace’s sexual harassment claim? How much of a role did ethics play in Marcus’s decision to walk away, and how much was simply because Dave was a pain in the ass to work with?

What do you think?

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Making Brand Connections: Why Fat Tire is My Favorite Beer

Posted in Beer, Wine & Spirits, Customer Experience & Reviews, Small Business, tagged , , on December 4, 2016| 2 Comments »

As a business development manager at Warc–a service devoted to helping advertising professionals create, buy and sell effective advertising*–I spend eight hours every workday talking to prospective clients about how insights (i.e. research) is the first step to building strategic ad campaigns that drive sales.

*Sorry for the elevator pitch but I couldn’t help myself!

My day job, combined with my friends Gil and Elliot’s recent interest in advertising, got me thinking about why I’m loyal to some of my own favorite brands.

*As savvy consumers, Gil and Elliot have begun to take notice of contemporary advertising platforms like product placement, native advertising and highly-paid YouTube celebrities, a.k.a. YouTubers.

And where better to start than a product I buy quite a bit of: beer.

I’d consider myself a bit of a beer snob, but I didn’t start that way. Ten years ago, then in my early 20s and always on a budget, I generally drank whatever was cheapest. My first question when I visited a bar was, “Do you have any specials?”

It wasn’t until a trip to visit my uncle Frankie in Arizona back in 2007 that I started to form a connection to one beer in particular.

When I got off the plane, happy to trade my heavy winter clothing I’d brought from New York for a t-shirt and jeans, Frankie picked me up from the airport and brought me to his favorite local sports bar, Zipps, for some wings and beers.

As I reviewed the bar’s domestic beer selection, Frankie suggested a beer I’d never heard of from a brewery in Fort Collins, Colorado. The beer was called Fat Tire.

“Do you mean Flat Tire?” I asked.

“No man, it’s Fat Tire,” Frankie replied.

I ordered the beer with the odd name, and I liked it a lot. It wasn’t too fancy, just a simple, drinkable amber ale. It had more flavor than the cheap, light beers I was used to drinking.

Frankie and I had a great weekend together. Frankie is just six years older than me, so our relationship growing up had been sibling rivalry-esque. But on my visit we had a chance to hang out for the first time as adults. I was glad for the chance to bond with my uncle and, of course, try Fat Tire.

fat-tire

I was disappointed when I returned home to New York and learned that New Belgium, the brewery that produced Fat Tire, didn’t distribute its beer in my area. I would continue to look for Fat Tire every time I visited Arizona, Las Vegas, or the West Coast. I enjoyed the thought of having a “go-to” beer when I traveled to the other side of the country. If a bar, restaurant or casino was serving Fat Tire, I ordered it.

When I got married a few years later, I was excited to learn that Fat Tire was available in Virginia, the state where my wife and I tied the knot. I made sure we were serving my favorite beer during the cocktail hour and reception.

Since that first visit to Arizona, I’ve tried many, many new beers, and have developed a fairly sophisticated palate when it comes to craft beers. Have I had better beers than New Belgium’s Fat Tire? Sure. But I still consider Fat Tire my favorite beer. It’s not because it’s the best beer I’ve ever had; it’s because I associate it with that positive memory of my visit to Arizona, the subsequent visits to see family Out West, and my wedding.

So, what does this have to do with advertising? What can an advertising professional–for example, someone at an ad agency whose job it is to figure out where and when to advertise on behalf of its client, a craft brewery–take away from my story?

Bud Light and Coors Light, which fall under the massive conglomerates Anheuser-Busch InBev and Molson Coors, have been associating themselves with the things Americans love for many years or years, particularly when it comes to sports. It’s just about impossible to consume an American sporting event–watching on TV or online, listening on the radio, or in-person–without seeing several ads for these beer brands. And whether you consciously notice it or not, you’re associating the (hopefully) positive experience of watching your team play with the brands that advertise alongside it.

Of course, an independent, employee-owned brewery like Fat Tire, or the many even smaller breweries like it, don’t have the budget to flood the airwaves with commercials to raise awareness for their beers. But when my wife and I attended a small music festival in Charlottesville, Virginia, a few years back, New Belgium was there with a sponsored tent and pouring four of its beers I’d never had before including a tasty summer brew, Snapshot. I’ve purchased Snapshot and other New Belgium beers since then, and I always associate their beers with positive memories.

As it turns out, New Belgium didn’t have to spend millions of dollars on a 30-second Super Bowl commercial to create an opportunity to earn my business.

Now, let’s be realistic: I don’t stand in the beer aisle at my local grocery store and stare blankly into the cold cases while I replay the Fat Tire-related highlights of my life every time I buy a six-pack. But on some level, I’m thinking that when I’m buying that beer, a positive feeling will come along with it.

The craft beer business these days is brutally competitive. While there are more tiny breweries making great beer than there have been in any point in American history, it also means they’re all vying for market share (from beer snobs like me) and, unfortunately, they won’t all get it. But with the limited marketing dollars they may have, I’d advise them to make their presence felt at local events. As Peter Sims suggests in his book, Little Bets, if you can cheaply and quickly test an idea, it’ll allow you to tweak a good idea until it’s great–or rule out a bad idea all together. Maybe that means hosting a beer tasting at a local food truck festival. Or sponsoring a tent and selling your best beers at a small concert. Or just pouring small cups of cold beer to sweaty volunteers on a hot day at a charity event, even a summer 5K.

Small craft breweries will never realistically compete with AB Inbev and Molson Coors. For most, the best case scenario is to gain enough national attention to get acquired by one of the “Big Beer” companies. Even the biggest American craft brewery, The Boston Beer Company (which brews Samuel Adams) isn’t close. As its founder, Jim Koch says, Budweiser pours more beer down the drain than his brewery produces in a year.

But if you can start small and local, and connect your beer brand with something positive that your prospective consumers can look back on and smile, you’re off to a pretty good start.

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The Increased Price of Nice Nails, Post-New York Times Expose

Posted in Customer Experience & Reviews, New York City, Small Business, tagged on May 31, 2015| Leave a Comment »

On May 7 the New York Times published an expose about the horrific working conditions for manicurists in many of Manhattan’s nail salons, “The Price of Nice Nails.”

Specifically, the article pointed to many cases where workers were being paid abysmally low wages—after initially being forced to pay salon owners for the job in the first place—with little opportunity to earn more or work their way up to a decent living wage. Even well-tipping customers are no boon for these workers, because the salon owners are skimming their workers’ gratuities, too. The article also pointed to the hazardous conditions brought on by manicurists working with and breathing in harmful chemicals all day, often with no masks.

Suffice it to say the Times did not paint a pretty picture of NYC nail salons and many customers, including my wife, were left wondering if there was a way to be a “responsible” mani-pedi customer.

On Thursday night she had her first post-NYT mani-pedi. She went back to a salon she’d been to many times before, Angel’s Nail on the Upper East Side. Despite the claims in the Times, she felt Angel’s maintained a clean shop, the workers usually seemed in good spirits, and the prices weren’t dirt cheap to the point where she felt they were cutting corners on employee wages.

As the Times article pointed out, mani and pedi prices in NYC are actually lower than in other parts of the country—which is unheard of for basically any product or service I can think of—because a) the area is so much more concentrated with salons and b) salon owners pay their employees so little. From the Times story:

The typical cost of a manicure in the city helps explain the abysmal pay. A survey of more than 105 Manhattan salons by The Times found an average price of about $10.50. The countrywide average is almost double that, according to a 2014 survey by Nails Magazine, an industry publication.

With fees so low, someone must inevitably pay the price.

“You can be assured, if you go to a place with rock-bottom prices, that chances are the workers’ wages are being stolen,” said Nicole Hallett, a lecturer at Yale Law School who has worked on wage theft cases in salons. “The costs are borne by the low-wage workers who are doing your nails.”

If there was any question as to whether Angel’s Nail was aware of the NYT article (and the potential backlash against Manhattan nail salons), it was answered right away on the price board. My wife reports that in previous visits she paid about $33 for a mani-pedi at Angel’s. But this past Thursday, the same service was priced at $43–a 30% increase.

The way I see it we can interpret the big price bump in one of two ways: either the $10 difference represents the salon’s mea culpa over previously paying its workers poorly, now showing its customers that Angel’s has seen the error of its ways; or it represents a smart salon capitalizing on an opportunity to monetize its customers’ guilt for previously paying so little for their mani-pedis (though, why should customers feel guilty if the salon wasn’t doing anything wrong?).

The salon was nearing closing time when my wife arrived so she got the benefit of having two workers tend to her, one on the mani the other on the pedi. When she went to pay her total came to $47 (not the $43 from the price board, so now it was a 42% increase from her last visit). With the article in mind, she didn’t feel like she was in a position to argue, so she went ahead and paid it. On top of that she tipped BOTH workers, more than she normally would have. All told she paid around $55 for a the same mani-pedi that used to cost her about $38.

I can only assume other nail customers are seeing changes in the pricing–and possibly the level of service, cleanliness and customer service–at their local salons. I’d like to think its made the bad salons clean up their act. If that means the good salons are using it to make a little more money for themselves, well, I’ll leave the laws of supply and demand sort out whether that’s a smart strategy moving forward.

Have you been to a Manhattan nail salon before and after the Times article? Have you seen a difference?

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The Profit Goes to SJC Drums and Saves Business, Brothers

Posted in Small Business, TV, tagged , on May 17, 2015| Leave a Comment »

I was all set to write a snarky review about the season 3 premiere of The Profit. I assumed it would start off with a bang–and by bang I mean another stubborn, inept small business owner who, by halfway through the episode, the audience ends up hating and rooting for Marcus to walk away from.

Instead, I saw actual human beings having actual human emotion, and the story about the failing business was secondary.

Marcus and the audience first meets Mike and Chris of SJC Drums at a trade show in California. Their booth is packed and everyone seems to be having a good time–a little girl shredding it on drums!–but we learn that Chris, a “partner” at SJC, quit his six-figure job to make half that doing the operations and books for SJC. Oh and “partner” is in quotes because he doesn’t have any equity in the company for some reason. Huh?

The product seems top-notch–Marcus says the drums are “badass.” (From what I know about drums–literally nothing–they look really nice.) SJC’s customers, apparently, include Green Day, Imagine Dragons, and Lady Gaga. But they’re only making “15 points,” or 15% margin, on their drums. (Marcus says their low margins are “not badass.” Good one.)

Later, Marcus visits SJC a  their headquarters in Massachusetts. The warehouse is pretty messy and we learn their process for making drum kits stinks–Chris and Mike aren’t on the same page on which orders are the highest priority, which means the employees don’t know which ones to make first–and they are just about broke. Nothing surprising here as far as The Profit goes–if the business was doing everything right, Marcus wouldn’t need to be there.

But here’s where it gets interesting. Marcus sits Mike and Chris down in the back office and Mike tells him that he and his brother Scott started the company (SJC are Scott’s initials) but Scott left in 2013. Mike bought out Scott’s half of the business for–get this–$533,000.

WHAT???

Mike explains that in order to pay Scott back, he has been paying $2,000 a month and will do so until year 15, when he will pay the remainder in a balloon payment of $285,000.

WHAT???

Mike says he didn’t want to short change his brother on the way out–whether he jumped or was pushed we’ll find out later–by offering less than the company was worth. He starts crying when Marcus observes that Mike put his brother ahead of himself. “I wish he understood that,” Mike says through tears.

But something’s not quite right here. Mike’s coming off as the caring brother (no idea if he’s older or younger than Scott) but clearly something big and ugly happened that we don’t know about yet.

After a scene where now Chris is also crying to Marcus in the snow about how much he loves the business–despite being a 0% equity partner–Marcus is ready to BALL OUT. Here comes symbolic handshake and check time.

BOOM. $400K for a third of the business. Mike hesitates and has dumb concerns. Marcus shoots him down. YOU WILL TAKE THIS MONEY. Mike takes the money. But there’s a catch. Marcus is also pushing a third of the company to Chris, so they are all equal partners at SJC. Mike is like, oh yeah I was totally gonna suggest that, and agrees to Marcus’s conditions.

Marcus rounds up all the employees the next day, explains the deal he made with Mike, and tells them from now on they are selling three levels of drums–good, better and best. Instead of only selling kits worth of Imagine Dragons, they will sell sets that a beginner can afford and hits the 40% margin goal Chris set so that they can, ya know, make money when they sell drum kits.

But the staff is having trouble cutting costs without cutting quality significantly.

Marcus goes to visit the mysterious other brother, Scott. Scott is a soft-spoken, seemingly sensitive guy who clearly loves music and making instruments. (He estimates having made 5,000 drums in his life.)

Scott’s side of the story is that Mike hired all his friends to work at SJC and those guys would all make fun of Scott. Listening to him talk and having seen some of SJC’s employees, I can totally see that. Mike’s the guy with tattoo sleeves, a black cap and a black hoodie, and so is all the staff at SJC. Meanwhile Scott is a little artsy, maybe a little music-nerdy, not necessarily the go along to get along type. It’s not hard to imagine a work environment in which he, despite maybe being the most talented guy in the shop–AND THE FREAKIN’ CO-FOUNDER–might feel intimidated into walking away from his own business, which has taken on a bully culture in which he’s the sole target.

Marcus convinces Scott to come back to SJC, at least temporarily, to put his expertise towards their 40% margin problem.

When Mike sees Scott walk in with Marcus it’s Awkward City, population: 3.

Mike tries to open the conversation but Scott is clearly hurt. “What did I ever do to you?” They go back and forth a while and finally agree to talk about drums rather than personal beefs. Marcus brings Scott out to the warehouse.

Now Mike is crying–literally crying, again–to Chris in the back office about how it’s too awkward, he won’t work at SJC if Scott is there, etc.

Marcus comes into the office and rather than trying to play therapist he gets REAL with Mike. He tells him his earlier apology to Scott during their bickering session was garbage. (Marcus was totally right, BTW. It was one of those apologies where you apologize for how the person is feeling, but not for your part in it. Classic apology loophole.) “I’m not Oprah. To think that your brother doesn’t add value is f—ing asinine.” Go fix it, he tells Mike.

Mike goes back to Scott and makes a better apology, but Scott is still not ready to talk about “brother things.” Mike replies, “Well just so you know, I am ready to talk about brother things. I want some sort of relationship that is healthy for us.” As much as Mike has ostensibly dicked over his brother, it sounds like he’s genuinely remorseful and feels really bad about what went down. This explains why he’d be agree to those ridiculous buyout terms. At this point I kinda just feel bad for both of them, not being able to settle their brother things.

They shake hands and leave the conversation there. It’s a rare case in reality TV where the emotion feels real, not manufactured by the producers.

The next day Scott is back and straight SCHOOLING SJC’s staff on how to cut costs for the drums to get to a “40 points” margin. Dude is just solving EVERY problem the rest of the guys couldn’t. Even Marcus is blown away. “It’s kinda cool to listen to your brother,” he tells Mike. “Cuz he’s got some crazy s–t in his head, but he’s very smart.” Watching Scott work is pretty fascinating, even if you–like me–don’t know jack about drum-making. He’s like Matt Damon in Good Will Hunting, banging out that math problem on the blackboard at MIT like it was nothing.

Thanks to Scott, SJC now has a prototype they can make for $537 and sell for $895–a 40% margin. They test it at a studio with fancy schmancy audio equipment–which, BTW, who the hell knew there was so much technology in music?–and it passes with flying colors. You could actually argue the SJC “good” prototype is actually too good compared to what you’d get from most beginner kits. But either way it’s within the quality standards of SJC’s brand.

Mike–who up to this point doesn’t seem to be all that valuable of an employee at SJC–has the tall order of going to Sam Ash in New York City with Marcus to convince them to carry SJC’s “better” kit alongside their better-known, multi-national brands.

They’re not having it.

Mike, a better salesman than I gave him credit for, pulls out the big guns ad plays up the handmade in America angle. On top of that he name drops Green Day–they don’t actually say say Billie Joe but it’s implied that “he” and Mike went to each other’s weddings–and says he could get the band to make an appearance at Sam Ash. Richard Ash, grandson of Sam Ash, eats it up. (This scene, BTW, feels TOTALLY fake, but whatever.)

Meanwhile back at SJC Mike and Scott are tight again. Mike says the best part of Marcus’s visit was that Scott is back in his life and they have a relationship again. Again, it seems genuine. They hug it out. And scene.

Marcus does it again–rescues a failing business, and this time mends a family riff. WHAT CAN’T THIS MAN DO?

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Built on Entrepreneurship, Horizon Media Hosts ‘MKT’ Event for Local ‘Treps

Posted in Small Business, Working, tagged , , , on December 17, 2014| 1 Comment »

This post was written in anticipation of MKT, an entrepreneur event hosted by my employer, Horizon Media. The event took place on December 15.

I’d been working at Horizon Media for a few months when I heard the story of how the company’s CEO and founder, Bill Koenigsberg, started his ad agency back in 1989.

Koenigsberg was his early twenties, fresh out of college with a marketing degree in hand, when he went to work for a boutique media buying agency in Manhattan. (When an advertiser wants to buy space on a billboard, in a TV show, or on a website, it typically uses a buying agency to negotiate the price and purchase the ad for them.)

It was meant to be a temporary gig until he found something better. But he had a knack for the ad business, and ended up working at his first agency for six years.

He was doing so well, in fact, that the president of the agency promised Koenigsberg a car as a reward for his hard work. But when it came time to actually give Bill the car, the president reneged. Bill was not happy. When a headhunter called him with a job offer shortly after, he took it.

Koenigsberg eventually parlayed that job (from the headhunter) into an opportunity to buy the company that would later become Horizon Media, which he still owns today.

A small business in a big business’ body
Horizon Media is the largest privately held media agency in the world and boasts a client roster that includes GEICO, Capital One, and Burger King. With nearly a thousand employees across its New York and Los Angeles offices, it’s no mom-and-pop shop.

So it wouldn’t surprise anyone if Horizon’s office culture leaned towards the corporate end of the scale—by which I mean a stuffy, serious workplace straight out of Office Space—considering its size and the brands it reps. But it doesn’t.

Instead, Koenigsberg and Horizon have gone in the other direction when it comes to office culture.

Philanthropy is a major part of Horizon’s identity, forging partnerships with City Harvest, 96 Elephants, NY Cares, and Toys for Tots. Employees are empowered to host charity happy hours on The Terrace, our outdoor space which includes beer taps, with the proceeds going towards important causes.

In late October Horizon invited 75 first graders from a local elementary school to trick-or-treat in our offices. Afterwards the company treated the kids to lunch and surprised them with costumes the agency and its employees had purchased for them.

Horizon employees are also afforded myriad perks—many of which are unheard of at most companies—not to mention everyday use of its gorgeous office space. But at Horizon the extras go beyond happy hours or company sports teams or World Cup viewing parties.

At Horizon’s SoHo office it’s not uncommon to find Stephen Hall, Horizon’s chief marketing officer, in The Dunes—Horizon’s cavernous all-purpose space—interviewing guests like baker and Cronut inventor Dominique Ansel, or Upright Citizens Brigade comedy troupe co-founder Matt Besser. This past September renowned film director Robert Rodriguez stopped by for a talk as part of Horizon’s Hispanic Heritage Month event series.

MKT
In December Horizon will host MKT (pronounced “market”), inviting entrepreneurs to set up pop-up shops in The Dunes and sell their products and services. Businesses run by Horizon employees and their families and friends get first priority, after which vendors from the local small business community like Brooklyn Renegade, Union Square Holiday Market, The Market NYC, Scoutmob and Etsy populate the remaining spots at MKT.

You might be asking what a local marketplace of entrepreneurs selling their wares has to do with planning and buying media, i.e. Horizon’s area of expertise.

“Business is Personal is intangible,” says Hall, referring to Horizon’s company tagline. “You have to experience it to believe it.”

Hall points out that every media agency is constantly trying to differentiate itself from the competition to land its next big client. But an event like MKT, he says, “turns words into action.”

The idea for MKT came from Leena Danan, Horizon’s VP of business development. “We started MKT as a celebration of entrepreneurship on [Horizon’s] 25th anniversary.” December 2014 marks Horizon’s third MKT event in two years. “This year,” Danan says, “we had multiple referrals both internally and externally, so we are thrilled that employees and past participants are excited to see MKT succeed.”

Horizon Side Hustle
Several Horizon employees have used MKT to showcase their talents outside of their day job.

Meeting and events specialist Brandon Smith, who raps under the name SMTH (pronounced “Smith”), has performed his songs at several Horizon events, including MKT.

“The second I get out of work it’s just straight to the studio, or straight to a shoot,” says Smith. “Every free minute that I have, I just put it into my music.” The music videos for SMTH’s songs, “Ticket to the Moon” and “Last Straw,” have been featured on MTV.

Alex Pagano has really taken Business is Personal to heart, running events for Horizon during the day—including MKT—and running her own business, Look Sharp Events, by night. Pagano recently organized her company’s largest event yet for beer brand Stella Artois, the “Butcher, Baker, Belgian Beer Maker” series kick off in New York City.

Des’ Sweet Treats was founded by Desiree Walker and her daughter, Shayna, who works in human resources at Horizon. Desiree found baking therapeutic while undergoing chemotherapy for breast cancer. “I began playing around with a simple bread pudding recipe to create a variety of flavors,” she says. “My family and friends were my taste testers since my taste buds were off. … The rave reviews received were encouraging and many people began to suggest that I make baking more than a pastime.” Des’ Sweet Treats has attended every MKT event since it started.

External MKT-ers
Brooklyn-based TGT (pronounced “tight,” as in keeping it tight), founded by entrepreneur Jack Sutter, is one of the most exciting new entrants in this year’s MKT.

“I came up with the idea for TGT because I hated using a bi-fold [wallet]; it wasn’t the product for me,” says Sutter, who was at one point using a broccoli rubber band to carry his money. “I knew there was something better.

“I really had a need for this wallet and I kind of had a vision for what it could be,” says Sutter.

After producing some prototypes using scrap leather from a furniture store, Sutter took to Kickstarter—an online platform for crowdsourcing creative ventures—to fund production of his wallets on a larger scale. His funding goal was $20,000. He has raised $317,424 from more than 7,500 backers.

Sarah and Carlos Perla run Made with Nachos, a t-shirt company out of Brooklyn. The Perlas are design school grads who design all their own shirts, and hand-print them in their home studio. They shared the story behind their unique company name:

The name Made with Nachos came about one night when Sarah was cooking dinner. She asked Carlos if he could taste that “special ingredient.” Knowing she meant “love,” he responded with a wink and a smile “What…nachos?” and from that day forward they described things that made with love as Made with Nachos.

The Karako cousins, Michael, Sean and Daniel, are the founders of the reversible tie company Flip My Tie. The Karakos are the sons of the founders of Karako Suits, established 32 years ago in New York City, so men’s fashion is in their blood. They are participating in MKT for the first time.

Sean Karako says he was inspired to start a fashion line while watching ABC’s Shark Tank, the hit reality TV show where entrepreneurs pitch their ideas to big name (and big bank account) investors. “I saw all these entrepreneurs bringing great ideas and I thought to myself, our fathers have built such great relationships overseas that we should take advantage of it.”

Meanwhile another tie company is making its second MKT appearance. Davor Anic is a former TV producer in Europe with a master’s in fashion design and technology, who moved to the U.S. and started his own tie brand. Anic says he chose to specialize in ties because Croatia, where he’s from, is the “homeland of neckties.” (It’s true. I looked it up.)

It’s a great thing that a company like Horizon Media encourages entrepreneurship—not unlike the kind that Horizon itself was built on. But at the end of the day they still have a media agency to run.

“If everyone [quit Horizon and] did their own start-up we’d have a problem,” Hall jokes, “but we want to create an air of opportunity.

“MKT is like an open mic night,” he says. “If you’ve got some jokes or you can carry a tune, here’s a stage.”

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The Profit Follows Signs to South Carolina

Posted in Small Business, TV, tagged , , , on December 3, 2014| Leave a Comment »

This week’s episode of The Profit has Marcus Lemonis in Surfside Beach, South Carolina, helping ASL Sign Sales and Service. (Why do I have a hunch that the “S” stands for signs?)

ASL’s owner is Anthony Leggio, who you could probably guess from his accent has relocated to SC from Long Island. With a $200K loan from his dad, Louis, Anthony had the shop up and running. Revenue ($441K YTD) seems in pretty good shape, but Anthony, who I’m going to call Strong Island, is apparently very ambitious.

Strong Island is rocking some transition lenses with plastic black frames, a fade with spiked hair, tattoo sleeves and big arms, but is also thick through the mid-section. This has nothing to do with the episode, but it’s a very unique look.

ASL manufactures and sells any kind of sign you can think of. This is a big deal, Marcus says, because I guess most companies that sell signs have to get them manufactured by someone else.

Turns out, ASL is actually Anthony’s, I mean Strong Island’s, initials (middle name Sal because of course it is). But Anthony says ASL could also stand for “American Sign Legion,” which is pure gibberish, but I’m giving myself partial credit for that one. The logo, of course, is a cartoon version of Anthony himself.

It's about to go down... (Photo credit: cnbc.com.)

Just a coupla guys talkin’ about signs. (Photo credit: cnbc.com.)

Anthony’s non-Jersey Shore looking girlfriend Christina Christian (did I hear that right?) works at ASL for free and has no equity. I believe this is the way most Fortune 500 companies do it, so…

In Marcus’ little cartoon infographic he always does in every episode, he says ASL makes a sign for $45 and sells it for $450, so they’re basically printing money.

But Marcus has a wicked burn for ASL when it comes to their sales process: “1985 called and they want their sales process back.” OHHHHHHH SNAP. Don’t forget to tip your waitresses.

Despite his overbearing personality, Anthony is not aggressive enough when engaging a walk-in customer in Marcus’ view.

Marcus asks why Anthony why he called The Profit. If business is good, what does he need an investor for?Anthony is obsessed with growing business as quickly as possible. He reminds me of a young, Italian, tan, stocky Walter White. “I’m getting in the sign business,” Marcus says. “The question is, am I’m getting in the sign business with you.” Sort of a weird thing to say.

I just realized ASL also stands for American Sign Language. Why do I feel like Anthony has never heard of this?

Marcus says he’s not prepared to write a check today. He is putting the check book away.

Other people in the business, including Anthony’s dad (who BTW doesn’t have any equity, either) told Marcus that Anthony is a know-it-all. Also the shop is kind of messy as is the sales process, per the 1985 joke. But all in all the place is making money. It’s still not clear why Anthony would want to give away equity to Marcus for his help, which he doesn’t really seem to need.

Next, Marcus finds out that Anthony has been picking ugly, hard-to-read fonts for customers. Anthony is not a designer. He is also not a sales guy. The Bobs from Office Space and I are wondering, What would ya say…ya do here?

Josh, ASL’s head designer (for the sign company, not the sign language), and Anthony, give a customer conflicting estimates on how long it’ll take to refurbish his sign. Josh conservatively quotes him three weeks, but Anthony says they can bang it out in a week. (Okay, he didn’t say “bang it out,” but it seems like something he would say.) Marcus pulls Anthony aside and he seems to get it…or does he? Five seconds later (in TV time) he reprimands Josh in front of the customer for trying to quote the customer a cost.

Anthony reveals that he doesn’t need money but does want Marcus’ business–I guess making signs for Marcus’ hundreds of businesses? He says he wouldn’t be willing to do a deal with Marcus if Marcus didn’t throw a bunch of business his way.

Okay now a former customer of ASL’s finds out Marcus is in town and tells Marcus that Anthony–crap I was supposed to be calling him Strong Island this whole time–has a bad reputation in Surfside Beach and actually sued this guy. The guy says Anthony/Strong Island has a bad temper.

Later, Marcus walks into the shop and Anthony tells him, “Ya late!” IT’S ON. Only Marcus can call out tardiness on his show. There’s some yelling which is all macho-like, but no one throws a punch and both guys storm off in opposite directions. Lame.

Eventually things cool down and Anthony tells Marcus “I bent ova backwards for that son of a bitch,” re: the disgruntled customer he sued.

“Sometimes you gotta take a pile of poop and stick it in your mouth,” Marcus says, meaning you have to make customers happy even if they give you a hard time. I didn’t go to business school but I assume this poop thing is a common metaphor you learn in the better MBA programs.

With 17 minutes in the episode, Marcus says he’s walking out without doing a deal. I like when this happens, especially when Marcus says that lots of other small businesses can use investments and he’s not going to waste his time with the ones that don’t deserve his money. I couldn’t agree more.

“Marcus kicked me right in my f-ing a$$,” Anthony says through tears, ostensibly realizing the errors of his ways, i.e. trying to scam Marcus into investing in ASL a way to get sign business from him. It’s hard to take him seriously when he’s wearing a shirt with a cartoon of himself on it, but he sort of seems genuine.

Back from commercial and now we’re in…Los Angeles? Marcus is now revisiting a gourmet popcorn company called Planet Popcorn, which he walked away from in another episode of The Profit. Apparently after agreeing to invest, Marcus found issues with accounting and inventory. Also the owner, Sharla, seemed reluctant to make changes.

It kind of seems like Marcus feels bad for Sharla because after the episode aired she came out looking really bad, and she lost a huge account with Disneyland. That’s gotta hurt.

Marcus looks around and sees a more organized office and a more professional-looking Sharla (despite her dress’ plunging neckline) who knows her sh-stuff. But when Marcus asks her about the Disneyland account, Sharla says she doesn’t want to talk about, tears up, and goes into what appears to be a closet to hide. I mean I’m sure it still stings, but, like, get it together when the money man is standing in your office potentially ready to make you a deal.

Aaaaand she’s back. Despite losing Disney and apparently some other accounts and being humiliated on TV, she has picked herself up by her bootstraps (classic entrepreneur word!).

Now they’re sitting down talking business. She offers 20% of her business for $50K; he’s not having it. He’ll take 40% with a 50-cent per popcorn bag royalty, a la Shark Tank‘s Kevin O’Leary. The check book is coming out. Sweet redemption for Sharla and Planet Popcorn! Maybe Marcus will call ASL when Planet Popcorn needs a new sign! Maybe not.

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StartUp Podcast: The Prequel to Shark Tank?

Posted in Small Business, tagged , , , , , , , on November 16, 2014| 1 Comment »

I wasn’t a lemonade stand kind of kid.

Instead, when I was 8 or 9 years old I told my mom that when I grew up, I was going to own an entire fleet of ice cream trucks. Back then ice cream was the most valuable currency I dealt in. So, naturally, my dream job involved having unlimited access to it.

I would sit in an office above an ice cream distribution center—where the ice cream men went to fill up their trucks on in the summer—and do whatever one does in an office when one owns an entire fleet of ice cream trucks. (This was before the internet and even before computers were ubiquitous, so I imagined some sort of hopper for my papers and maybe even a paperweight.) And the best part, I told my mom, was that she could come visit me at work whenever she wanted and I’d give her free ice cream.

More than two decades later, shockingly, I do not own a fleet of ice cream trucks. I do not have an office above an ice cream distribution center. Hell, I barely even eat ice cream anymore. As best laid plans of third graders often go, this one sort of fell apart after I got really into Teenage Mutant Ninja Turtles.

For Alex Blumberg, the host, producer and subject of the new podcast StartUp, there’s a little more at stake than free ice cream.

Blumberg is best known for his work with public radio, including the program This American Life (producer) and podcast Planet Money (founder, co-host). But he recently quit both those gigs to start his own project: he’s starting his own media company which will focus on producing and distributing high-quality audio content via podcasts. Oh, and the best part–for us, anyway–is that he’s letting listeners in on the process. Here’s how Blumberg describes it on his website:

This show follows what happens next – my difficult journey from man to businessman. It’s a classic start-up story, but one that’s recorded in real time. I’ve documented disastrous pitches to investors, difficult conversations with my wife, and tense negotiations with my co-founder. The result is an honest, transparent account of something that happens all the time, but that we can rarely listen in on: starting a business.

StartUp is not a prescriptive how-to guide to starting a business from the ground up (this, despite several episode titles beginning with “How To”). It’s quite the opposite. It’s a show about a guy who knows very little about starting a business, and what happens along the way as he starts to figure it out.

The weekly series, which premiered on September 5, is just seven episodes in. So far Blumberg has taken us through a failed investor pitch, the process of taking on a business partner (after realizing he couldn’t do it alone), figuring out how to share equity with that business partner (a very cool insider’s look at emotional side of the process), assigning a value to a company that doesn’t make any money yet, and even picking a name for the company.

As I’ve written about previously on this blog, I’m big fan of ABC’s Shark Tank. On that hit reality show, entrepreneurs come to the sharks (i.e. potential investors) with a fully (or partially) formed companies asking for investments in exchange for shares of their businesses. Some entrepreneurs get deals, others are sent packing. On the show it all seems so simple.

StartUp is, in many ways, a prequel to Shark Tank.* As of episode #7 Blumberg’s company, Gimlet Media (for the origin of that name, check out episode #5), is still “pre-revenue.” On Shark Tank most pre-revenue business don’t get a deal unless the idea is very, very novel.

 *If StartUp is the prequel to Shark Tank, then shows like Hotel Impossible, Restaurant Impossible, and The Profit–all of which deal with businesses gone bad–are the sequels.

For those of us who have dreamed about owning their own business—for the record the ice cream thing is still on the table, though I haven’t figured out what I’d do all winter yet—and those who haven’t, StartUp gives listeners a fresh look into those steps between concept and actually taking those steps towards turning that concept into a living, breathing, (and hopefully) profitable thing.

The most interesting stuff for the listener tends to be that which is most gut-wrenching to Blumberg–from figuring out how much equity to give his partner (episode #3), to the constant self-doubt that comes with starting a business in your forties when you have a wife and two young children to consider every time you make a decision about anything.

In episode #2 Blumberg debriefs with his wife on the phone after an investor, Matt Mazzeo, in Los Angeles. Blumberg has been out to L.A. before, in episode #1, to meet with Mazzeo’s business partner, Chris Sacca. Mazzeo and Sacca are venture investors and business partners at Lowercase Capital. They have successfully invested in the technology space. After talking with Mazzeo, Blumberg is left with a pit in his stomach:

I’m feeling the same shitty way I’m feeling the last way I was out here. … It just makes me feel like I don’t know what I’m doing. … This is the thing: I’m sitting there talking to this guy and I’m describing something that feels like the biggest thing I’ve ever done, a scale beyond my wildest imaginings, something that I can’t even tell if I can pull off, and it’s totally not big enough. Like it seems small to him.

This is a really important insight, and one that I suspect a lot of startup business owners face when pitching investors. Especially in the tech space.

Can you or I invest in companies like Gimlet Media?
Episode #7 was about crowdfunding Gimlet Media. According to the episode, the 2012 Jumpstart Our Business Startups (JOBS) Act allowed for Americans to invest in private companies like Gimlet Media, which they were formerly not allowed to do. This means that through companies like Alphaworks, would-be investors could go online, find a company they wanted to give money to, and in exchange they’d receive equity in that company. (This is different than sites like Kickstarter, where you “donate” money but don’t receive any equity.) A Shark Tank for the Average Joe, right? Wrong.

Due to current Securities and Exchange Commission regulations, only “accredited investors,” i.e. those who make $200,000 a year and/or have a network worth of $1 million, may do so. (Alphaworks covers this in their FAQ.) If you’re an Above Average Joe, invest to your heart’s content. Otherwise you’re out of luck until the SEC loosens those regulations. Fortunately for Gimlet Media, they had enough friends in high places–in part thanks to attention the StartUp podcast has been getting–to get to their investment goal.

New episodes of StartUp are available about every two weeks. Whether you’re a future ice cream magnate or not, I recommend you give it a listen.

You find the StartUp podcast here: http://hearstartup.com/ – or you can use a podcasting app on your phone or tablet and search for StartUp. Happy listening.

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CNBC’s ‘The Profit’ Knows When to Walk Away (UPDATED with Larissa Swanson’s POV)

Posted in Small Business, TV, tagged , , , , , , on October 29, 2014| 31 Comments »

“You know, I do business on handshakes and I try to help people, and I do it to make money.”

That’s a quote from Marcus Lemonis, the star of CNBC’s hit show The Profit. Each week on the show Lemonis tries to help a failing business get back on its feet. Sound familiar? Well, it should (especially if you have read this blog).

Reality shows like Hotel lmpossible, Restaurant Impossible, and Bar Rescue feature industry experts visiting foundering businesses, addressing problems big and small, and within a week, transforming former money pits into profit machines.

But The Profit is a little different. Lemonis isn’t necessarily an expert the type of business, like hotels or restaurants, that he’s trying to rescue. He’s an expert in business. (For more on his background, check out his Wikipedia page.) His oft-repeated mantra is People, Process, Product. In each episode he examines all three and determines if the business has any hope for a turnaround.

And here’s the kicker: Lemonis isn’t just a hired gun, like Hotel’s Anthony Melchiorri or Restaurant’s Robert Irvine. Lemonis is putting up his own money, a la Shark Tank, to revive these businesses but also make a profit for himself. (The name of the show is just one big spoiler, isn’t it?)

Lemonis’ financial contribution is typically enough to pay off the business’s debt, plus some money for some upgrades to equipment that will have an impact on the bottom line. In exchange for his cash—it’s always such a baller move on when he whips out his checkbook and writes a million dollar check to a business owner—he asks for a large chunk of equity, often as high as 50%. He also requires full operational control of the business.

Like the “Impossible” shows, most of the time Lemonis business proposal and management style are met with some initial resistance from the owners, but eventually they realize that what’s good for him is what’s good for them. Happy ending, right?

Not quite. Sometimes, and this is much rarer on the various Impossibles, Lemonis can’t come to an agreement with the business, and he backs out. (While the check presentation is a big moment on the show, in reality I’m sure there are lawyers and accountants digging into the company’s financials and the owners’ credit histories to make sure the business isn’t a lemon.)

On the episode I caught last night, featuring Swanson’s Fish Market in Fairfield, Connecticut, Lemonis wrote the business a million dollar check to temporarily buy the building in which the market resides and clear up its debt, which he believed would be the pecuniary boost they needed to get back on track.

But as Lemonis (or his lawyers, off camera) dug deeper he discovered that the mortgage on the building was not, in fact, “in good shape” as the business co-owner Gary had said it was. It was in foreclosure.

Besides that, Lemonis couldn’t get past the fact that Gary owned a boat while some of his employees were covering the costs of the fish out of their own pockets. He also couldn’t get through to the other co-owner, Sue, about why her owning a BMW with $500 a month payments was sending the wrong message to her employees. Neither were willing to sell off their toys in order to take a little pressure off the business and, ya know, pay their frickin’ employees. (Unlike many struggling businesses I’ve seen on shows like this, these two had no guilt over paying themselves.) The icing on the cake was that when Lemonis came back a few weeks later to check in, he found out the owners were doing renovations on their home.

In the end Lemonis walked. There was no text at the end, like you’d see at the end of Hotel Impossible (“Occupancy is up 75% since Anthony’s visit. The hotel has plans to upgrade all rooms within the next six months.”) It was Lemonis’ quote (from the beginning of this post), and then the episode just kind of ends.

In a previous post I wondered why this didn’t happen more often, as it did in an episode of Hotel Impossible last season. If these people aren’t willing to do what it takes to run a successful business, why does the show still insist on helping them? I imagine there are so many American businesses doing things the right way (or at least what they believe is the right way) and still struggling. Why not help them instead?

(Here’s an idea for a show: when one small business is too stubborn or foolish to accept the free help of an expert—who, by the way, they called!—that expert goes across the street and helps their biggest rival. Or better yet, the expert starts his own business just to crush them. Too much? Watch the Hotel Impossible episode about the Thunderbird Motel–or read my post about it–and tell me those people deserve to stay in business.)

The only regrettable aspect of Lemonis walking away from Swanson’s was that the owners’ 24-year-old daughter, Larissa, was apparently working the hardest of any of them to keep the company afloat. She also seemed to be the only one who saw the value of Lemonis’ involvement and potential investment. Maybe somewhere in the near future she’ll open her own fish market and put her parents out of business? Or at least buy them out? After all, what better way to learn how to run a successful business than seeing first-hand all the ways not to run one?

***UPDATE*** I’m not sure about the sequence of events here but Larissa Swanson, the daughter of the owners of Swanson’s Fish Market, wrote a treatise on the company’s website in response to the way their episode of The Profit was edited and the deal that Lemonis ultimately walked away from. You can read the whole thing here, but the her key points are quoted or paraphrased below (with my own thoughts in italics).

  • “When we sat down for the deal they told us before hand that if he writes us a check, it is only for show purposes and we have to hand it right back.” That sounds about right.
  • “We also did not film for 4 weeks, the filming process started at the beginning of June and ended in September! We were strung along for 4 months. They don’t add that my mom had a contractor at the house painting bc we are fixing it up right now to SELL and put it on the market. We never even did a building deal with him, where he said he would buy It for one million. We did not see a penny for the entire 4 months.” This was not clear at all on the episode. In terms of timing Lemonis mentioned that he went back four weeks later, and that’s when he discovered the property was in foreclosure. More on that…
  • “On August 26th I was served papers by a sheriff on the building for kasowitz (the guy who did a mortgage for it)  I notified Marcus immediately via text..we were not aware that a foreclosure process even started. Our building is fine now and we are taking care of it. Our building also had a contractor Lien put on it 3 years ago and we had the lien removal paper but our mortgager never brought it to city hall to be taken care of and of course they never aired that either!” It’s starting to sound like a he said-she said thing, but ultimately if Swanson’s was even close to foreclosure Gary shouldn’t have said it was “in good shape.” Or was that creative editing, too?
  • “When the boat happened he moved it from the marina and put it in someone’s backyard before hurricane Sandy hit and the motors became ruined and it turned into a salvaged project. He bought that boat 15 years ago.” The fact remains that he’s apparently paying marina fees on a boat, but Marcus made it out to be a luxury yacht.
  • “Marcus even asked me to negotiate with people and had me promise to pay them the next day certified check and never even came through. Those people are so angry now that they are sueing us.” Um…
  • “They also didn’t add how my little brother has a serious mental illness that he was diagnosed with 3 years ago of schizophrenia and it’s so severe that we are constantly in and out of hospitals and have paid over 100k in medical,hospital,ambulance bills and medications.” The show easily could have gone the other way with this and played up this angle, a la Restaurant Impossible, but they chose to go in the direction of villainizing the Swansons instead.
  • Sue had three deaths in her family around the time of the taping, explaining her disconnected, erratic behavior.
  • “Halfway through filming [Sue] agreed to sell the BMW and we filmed a cute scene where we taped for sale signs on her car windows to show we would sacrifice for the deal but they didnt show that either of course.” It’s starting to sound like the producers made the call to cut this into one episode’s worth of content, even though they clearly needed more time to tell the story completely.
  • “I also wanted to touch base on our employees chipping in for product- that i agree was not right but it was a total of only two times and they got their money back right at the end of the day only because we had vendors who wanted cashiers checks in the morning for product and my mother or father were not there to get to the bank and there was not enough to cover it with cash in the register.” Again, they really played up this angle as if it was all the time. That said, it’s no way to run a business.
  • Larissa addresses the circumstances around the fires that destroyed their property and imputes them to a former employee with a drug problem. I’m not sure this is relevant except that it casts doubt for those who may have thought the Swansons may have set the fires themselves for the insurance money.
  • There are also some images on the site including Larissa’s text to Lemonis about the foreclosure and some other critical documents that the show glossed over.

So, what are we as fans of The Profit to make of all this? Well, we all know reality shows edit their footage in order to tell a succinct, compelling story in their allotted amount of time, usually about 44 minutes for an hour-long program. Some edits don’t matter as much, like the exact phrasing of a quote, but others can be specious, like some of what Larissa alleges above.

While I’ve enjoyed what I’ve seen of Lemonis and The Profit so far, at this point I’ll really need to take what he and the show are saying with a grain of salt. And I won’t be so quick to write a blog post that paints these small businesses featured on these shows in such a negative light, at least not until hearing both sides of the story.

As for you, I suggest you watch at your own risk.

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ABC’s Shark Tank & the ‘Swimming With Sharks’ Special

Posted in Small Business, TV, tagged , , , , , on May 21, 2014| 3 Comments »

I started watching ABC’s Shark Tank less than a year ago and since then, I haven’t been able to stop.

The concept of the show is simple: product inventors and/or owners of nascent businesses stand in front of five millionaires and billionaires–would-be investors in their business, or “sharks”–and pitch them on why they should invest their own money in exchange for part ownership (i.e. equity) in a company they’ve never heard of run by someone they’ve never met before.

Most of the presentations are what I’d call “professionally cheesy” (or “cheesily professional”?). They’re rehearsed little 30-second intros that tell the sharks the name of the company and tease what it does or makes, finishing with a flourish in the form of a catchy slogan often uttered in unison. (Jelly company Mango Mango went with, Are you ready for this jelly?) At some point during the little song and dance the entrepreneur(s) (or “treps,” for brevity’s sake) reveals what share of their company they’re selling and for how much equity, e.g. $50,000 in exchange for 20% equity in the company.

Depending on the product, there’s usually a short demo of how it works or what it does, after which the floor is open for sharks to pepper the treps with questions about manufacturing costs, margins, annual sales, their background, and anything else germane to a potential investment.

The better presentations–and the ones most likely to whet a shark’s appetite–are the ones where the treps A) know all the answers to the sharks’ questions and B) have good answers. By good answers I mean the company is profitable, the margins are high (i.e. the product sells for a high price but costs very little to make), and sales have increased year over year.

(One pet peeve of mine related to the Q&A portion is that almost every trep’s answer starts with, “So,” as in, “How much do you make it for and how much do you sell it for?” “So…right now it costs about $5 a unit to produce and we sell it at retail for $9.99.” I know it’s just a stall word in a nerve-wracking situation to let them gather their response, but they do it every time!)

Where was I? I blacked out. Ah yes, the sharks. Each has their own distinct business background (click the links in each shark’s name to learn more), personality, area(s) of expertise, and investment strategy. Episodes features five sharks from a rotation of six. The sharks, far more than the treps, make the show what it is. For the uninitiated, the sharks are:

  • Mark Cuban. The moral compass of the show. Usually very supportive and free with advice even if he doesn’t make a deal with the trep. Calls out his fellow investors for bad deals that don’t favor the trep. Occasionally calls out treps (2:20 mark) whose products/companies he deems specious, irresponsible, or who are on the show for free advertising and not actually seeking a partnership. (Cuban also forced Shark Tank‘s production company to change its policy re: taking 5% of all businesses that appear on the show, regardless of whether a shark chooses to invest his/her own money. What a guy.)
  • Kevin “Mr. Wonderful” O’Leary: Shark Tank’s answer to Simon Cowell and the show’s constant reminder that it’s not a charity—it’s about making money. On almost every episode Kevin will eschew equity and request a royalty deal where he recoups his investment upfront by taking a cut of every unit sold until he’s paid back in full, then taking a smaller royalty for each unit sold “in perpetuity”—meaning FOR-EV-ER.
  • Robert Herjavec: The nice family guy—but don’t jerk him around or he’ll say things like, “I’m a very nice guy, but don’t mistake my kindness for weakness.” Also loves kids and dogs.
  • Lori Greiner: A Chicagoan (listen to the accent) and big player in the QVC world—which is the driver behind most of her deals, as in “This will sell very well on QVC.” (Incidentally, I had no idea QVC was such a huge moneymaker but based on the size of some of the checks she writes, it’s doing a-OK.)
  • Barbara Corcoran: The wacky older woman on the panel–wacky like a fox, that is–also with ties to QVC.
  • Daymond John: Tends not to stray too far from his forte, fashion. Will regularly mention that he started out selling hats on the street (he founded FUBU).

Any time I talk about Shark Tank (which is often) to someone and they’ve actually seen the show, the response is almost always “You watch it, too? I LOVE Shark Tank!”

On May 2 ABC aired a behind-the-scenes special, “Swimming With Sharks” (click the link to view the special) that gave fans a look at the sharks when the camera wasn’t rolling, and some dirt about some of the show’s biggest deals (and non-deals)—as well as some of the stinkers. Below is a recap of each company update:

  • Breathometer ($50): A device that plugs into smartphones and works with a mobile app to perform a self-Breathalyzer test. Per the special, Breathometer expects $10 to 12 million in sales in 2014.
  • Lollacup ($15): A children’s drinking cup with a weighted straw that allows kids to drink even when the cup is not right side up. Profits from Lollacup netted the trep couple who started the company with their $1M dream home.
  • Simple Sugars ($22): All-natural sugar scrubs. Was doing $88,000/year in sales pre-Shark Tank, finished 2013 with $2.1M in sales.
  • Bubba’s Boneless Ribs: A patented process for removing the bones from ribs (without losing the essence of the rib, of course). $200K in first ten days after appearing on Shark Tank.
  • PRO-NRG ($2): A Brandon Jacobs-backed energy drink eventually repackaged as a protein water–after Daymond’s investment and intervention. Per its founder, they’re over $1.5M in sales. During their presentation Mr. Wonderful repeatedly referred to the company as “Pro Nerg.”
  • Stella Valle: A jewerly line made by two female U.S. veterans. $2.5M in sales post-Shark Tank ($50K before).
  • Tipsy Elves ($60): Intentionally ugly Christmas sweaters. No sales figures given.
  • Grace & Lace ($20-36): Lacy women’s socks designed to be seen partially while wearing boots. No sales figures given.
  • Tree T-Pee ($6-7): A mini tent designed to put around trees keep in water from sprinklers to save water. After appearing on the show the trep scored a deal with Home Depot.
  • Voyage Air Guitar ($429): A guitar that folds in half. Working with Kevin, the trep licensed his product to Fender. No sales figures given. Despite their business partnership, the trep and Kevin seem to genuinely dislike each other.
  • Wicked Good Cupcakes ($8): Cupcakes in a jar. Kevin’s royalty deal of 45 cents for every cupcake sold paid off. They’re selling $265K/month.
  • Toygaroo ($40/month): “The Netflix for toys,” lost $200K and went out of business in six weeks. Per Mark, Kevin and the trep had different visions and that caused the company to go under.
  • Copa Di Vino ($3): The trep rejected the sharks on two separate episodes. Mark called him a “gold digger” who was only on the show for the PR. The $300K investment the treo was seeking at the time of his second appearance would have been work $3M today. Now doing $25M in revenue. Trep has a private jet, apparently. Good for him.
  • ReadeREST ($9): A ridiculously simple magnetic hook on which to hang reading or sunglasses. $8.2M in sales so far.
  • Scrub Daddy ($7): A scratch-free scrubbing sponge. The most lucrative trep in Shark Tank history is expected to finish 2014 with $16M in annual sales, and is projected by shark investor Lori to do $30M next year. Within the first hour of their episode airing, Scrub Daddy had 30 to 40K website hits.

Some other thoughts from the special:

  • Mark, according to Robert, is worth more than the rest of the sharks combined ($2.6 billion per Forbes), which I didn’t realize. I’d imagine in some cases, though not all, this gives him an advantage when negotiating against the others.
  • “We are the Mick Jaggers of the business world,” according to Robert. Um…
  • Mark mentioned that it was a family show and people come up to him and say their 9-year-old daughter is obsessed with valuation. Adorable.
  • “Buying a nicer car isn’t as powerful as taking care of my children,” says Robert. He’s so quotable!
  • Interestingly in the “shark on shark” interviews the two female sharks said Mr. Wonderful was a teddy bear, while the guys called him a jerk (excluding Mark Cuban, who wasn’t interviewed, probably because they actually hate each other in real life).
  • We can certainly debate the “realness” of Shark Tank, the vibe I got from all the shark interviews is that it’s genuinely competitive and that none of them wants to be bested by the others. And while this might be viewed as a bunch of rich men and women gambling with these treps’ companies like they’re at a high stakes poker table, the treps stand to gain the most if one of the sharks bets big on them.

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