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Episode name - Jazz Audio
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00:00Yeah, no, it's not connected.
00:02Hi.
00:03How are you?
00:04Nice to meet you. I'm Jeff.
00:05Jeff, I'm Marcus.
00:06Pleasure.
00:07Hi, Danielle. Nice to meet you.
00:08Danielle, nice to see you.
00:09This is our son, Liam.
00:10Liam, how you doing, my man?
00:11Good. How are you?
00:12So we own a company called Escape Room New Jersey.
00:15Okay.
00:16We now own three locations.
00:18Oh.
00:19What kind of revenue do these locations do?
00:20Angola's the smallest.
00:21Angola's about $10,000 a week, I would say.
00:25So just extrapolate that out, a half a million a year?
00:28Yes.
00:29What's the next location?
00:30Madison, probably pulling in about $15,000 to $20,000 a week.
00:34So Pompton Lakes will be our next location.
00:36And revenue there?
00:38That one's between $20,000 and $25,000.
00:40Okay, so $2.5 million in total, is that about right?
00:43The whole company, I'd say about $2,000.
00:45What's the bottom line?
00:46Between $1,000 and $1,500.
00:48Wow.
00:49So that's a pretty big net margin return.
00:51Why don't you have more of these?
00:53That's where you come in.
00:54Oh.
00:55I want to create this into a franchisable concept.
00:57I want to open these all over the country.
00:59That really is the dream.
01:00Okay.
01:01All right, let's have some fun.
01:02Yes.
01:03Let's have some fun.
01:04We're going to do the escape box first.
01:07There's a coin in here that you need to access.
01:09You're looking at the box.
01:10You can see there's locks, right?
01:12Looking for a combination.
01:14Okay.
01:15Excellent.
01:16And here's my coin.
01:19So what are we doing?
01:23And now you may bump.
01:26Make you out, Liam.
01:27And he's down.
01:29Mark this one.
01:30Next we're going to move to the rage room.
01:33I get it.
01:35Clearly based on the numbers, it's a great cash flow business.
01:42But if you don't constantly change the game, at some point your ability to retain customers would dissipate.
01:50And right now for me, I don't think it's scalable.
01:54So I don't think that it's something that I would invest in.
01:58Thank you for the opportunity.
01:59Of course.
02:01I appreciate you.
02:02Thank you, sir.
02:03Thank you for your time.
02:04Thank you very much.
02:09Live.
02:10Through this.
02:11Wow.
02:12How are you?
02:13Hello, Marcus.
02:14Very good to meet you.
02:15What is your name?
02:16Frank.
02:17Frank, nice to meet you.
02:18Sean.
02:19Sean, nice to meet you.
02:20Carlos.
02:21Carlos, nice to meet you.
02:22Brian.
02:23Pleasure.
02:24Brian, how are you?
02:25So we are Brothers Guitar Shop.
02:27We are a retail store in Manhattan.
02:29We started out of the back of our hardware store, our family owned business.
02:33Oh, wow.
02:34Yeah.
02:35Our parents are immigrants.
02:36So we're first generation Americans.
02:37It's a family business that's been established for how many years in New York?
02:4140, 40 years.
02:4240 years pushing.
02:43We've been really focusing on trying to have us spending more time on the guitars.
02:47Guitars, it's more of our passion.
02:49You know, that's what we like to do.
02:51Is it more profitable than the hardware store?
02:53No, it's not at all.
02:55The margins are way better in the hardware business.
02:58100%.
02:59You know, a pack of screws, you buy it for $0.57 and sell it for $4.99.
03:04Here, it's a 30% margin on all new gear.
03:08Do you guys provide guitar lessons?
03:10We do, yeah.
03:11We also love to do the used stuff.
03:13The used, we make the most profit right now.
03:16I think that...
03:17No, you don't.
03:18In the guitar lesson business, there's no cost associated with it.
03:21You essentially split the revenue with the instructor.
03:24Totally.
03:25And that's it.
03:26Makes sense.
03:27Totally.
03:28It's 100% margin.
03:29Well, the used, we see the most money out of it in the register.
03:31Generating the most revenue is different than it being the most profitable.
03:34Yeah.
03:35It can generate the most gross profit, but there's also expenses against it.
03:39Can I use your guitar as an example?
03:40Please.
03:41Um, consider this like your revenue.
03:44And then all the way down, you'll have your cost of goods and you'll have all of your expenses.
03:48And then at the bottom, you'll have your profit or not.
03:51And I think that if you're running multiple businesses, this is one P&L for used sales,
03:56and there's one for new sales, and there's one for service, and there's one for lessons.
04:00And in the end, you're going to see what the bottom line is.
04:04This hobby business still feels like a hobby because knowing the sectors of revenue and
04:11the gross profit and the expenses associated with them is not as clear for me yet.
04:17Am I wrong?
04:18No, you're absolutely right.
04:19You're absolutely right.
04:20I mean, we're kind of all over the place.
04:22And that's why I don't think there's an opportunity here for us together.
04:27Keep your hobby going, but not at the expense of your hardware business.
04:32Thank you for coming today.
04:33Thank you, Marcus.
04:34It's great to meet you.
04:35I appreciate it.
04:36We'll see you next time, guys.
04:38That's it.
04:39That's it.
04:54Okay.
05:03Well, that's an interesting way to make an entrance.
05:05Nice to meet you there, young fella.
05:06How are you?
05:07I'm Marcus.
05:08Marcus, I'm Gene Seller.
05:09Nice to meet you.
05:10Gene, nice to meet you.
05:11You too.
05:12So what is it that you do?
05:13I own a store called Jazz Audio, and I do a bunch of accessories on cars.
05:17You know, we do amplifiers and lights underneath the car.
05:20Yeah.
05:21Power steps, rims and tires.
05:23So your company soups up my ride, makes it sound better, look better.
05:28It's perfect.
05:29Let's maybe put the music on.
05:30I want to hear how good this bass is.
05:33I'm going to give you a demo.
05:34Because I just want to clarify, I'm from Miami.
05:37So bass for me is very different than it is for most people.
05:40I know what bass is.
05:41You do?
05:42I do.
05:43And you have a subwoofer behind the seat?
05:45I got an amp behind the seat.
05:46Uh-huh.
05:47And by the way, this is called a downfire box, and I'll tell you why.
05:50A what?
05:51Downfire box.
05:52Downfire.
05:53Right.
05:54You know why?
05:55Because you can put anything you want on top of it.
05:56Okay.
05:57Hold on.
05:58Yeah, get in there.
05:59All right, go ahead.
06:00Okay.
06:07You know what I'm saying, buddy?
06:09Now we're rocking.
06:13That's how you drive a car.
06:17I thought I was going to be a rock star.
06:18It didn't happen, so I had an opportunity to open up a stereo shop,
06:22and I jumped all over it.
06:24So I've been in the car business...
06:25I know.
06:26...for a long, a big part of my life,
06:28and seeing stuff like this,
06:31aftermarket distributor of car accessories that does insulation.
06:34Right.
06:35And there's a million of them.
06:37Yeah, but they're not cheap.
06:38They're not jazz audio.
06:40I know you're going to ask me, what separates you?
06:42Me.
06:43My whole system, my whole procedure.
06:45You have a process?
06:46Of course.
06:47It's like McDonald's.
06:48I got a process.
06:49So let me, let's take a step back.
06:50Shoot.
06:51If you're not a manufacturer,
06:53your market is only as big as your labor reach.
06:57Your basic trade area, BTA.
06:59Okay.
07:00That basically means that this is the area that you can influence.
07:04Yeah, my store will take out a certain amount of, you know, square miles.
07:08100%.
07:09So it's limited.
07:10Yeah, unless you have a bunch of stores.
07:12Is that your goal?
07:13That's my goal.
07:14How many you have now?
07:15I have one.
07:16What's your total revenue?
07:18Bring it in?
07:19Like one, three.
07:20And on the bottom line?
07:21400.
07:22450.
07:23And so how much money have you saved?
07:26Uh, do I really want to say that?
07:29Well, I mean, I think, I think ultimately.
07:31I got money saved.
07:32No, you don't have to give me a dollar amount.
07:35But what I'm asking, what I'm trying to understand is, you've built a heck of a business.
07:39Yes.
07:40Truly like the American dream.
07:41Yeah, definitely.
07:42So why am I here?
07:44What's the opportunity?
07:45I want to get another salesperson.
07:47I want to start training some people at the location I have now, get them ready for the next location.
07:53My job is to help you navigate to where you want to get to.
07:56And to use my resources and things that I know and the people that I know and the things that you know and try to put it together to make the road from point A to point B as straight as possible.
08:07Yeah.
08:08No matter what we do, no matter how much we know, that road's not going to be straight.
08:11The fire in my belly's not out.
08:13To do what?
08:14Make more money.
08:15You're a great guy.
08:16I did a lot.
08:17I'm just thinking about what I want to do right now.
08:18Well, listen, you can get back to me.
08:20I could or I can tell you now.
08:22You could do both.
08:23Yeah.
08:24It's your choice.
08:25Yeah.
08:26You're a great guy.
08:36I did a lot.
08:37I'm just thinking about what I want to do right now.
08:38Listen, you can get back to me.
08:40I could or I can tell you now.
08:42You could do both.
08:43I think, I think this is an opportunity worth pursuing.
08:47I want to do some business with you.
08:48If Gene's numbers are accurate, $1.3 million in revenue and $400,000 in profit, well, that's
08:56interesting to me, but I'm not just going to write a check.
08:59I want to look under the hood to find out if the people, the process, the product, and
09:04the profit are legit.
09:06I guess we're about to find out.
09:09And, we're going to go in the car.
09:10I mean, Marcus are getting together.
09:11This is happening.
09:13Marcus got hooked on me.
09:15There might be a million installers out there, but right now, there's only one Gene out there.
09:19Until me and Marcus partner up and we make another Gene for our next store.
09:23So, another Jazz Audio coming soon to a place near you.
09:32I'm here in Long Island, New York, to see Jazz Audio and its owner, Gene.
09:36When I saw the product the other day, I saw a couple of things, but I want to understand.
09:40Is this a big business? Is it even an opportunity?
09:45How are you?
09:46How are you?
09:47Good, I'm Marcus.
09:48I'm Marcus. I'm Rob.
09:49Rob?
09:50Robert, yeah.
09:50Michael, nice to meet you.
09:51Michael, nice to meet you.
09:52The aftermarket automobile business is really enticing because not only do manufacturers tend to drive price down by leaving options out,
10:00but with the used car market being as good as it is, it gives consumers the opportunity to customize the vehicle to exactly what they want.
10:08And whether that's rims, running boards, alarms, leather seats, a variety of things, it's a great business with great margins.
10:15Gene, Marcus is here to see you.
10:17Marcus is here for me?
10:18Yep.
10:18You want to meet Marcus?
10:19Good morning.
10:20Buddy.
10:21Hey.
10:22Marcus, how are you?
10:23How are you?
10:23That's my wife, Susan.
10:24How are you? Nice to meet you.
10:26She made a surprise visit on me.
10:27She came to check on you to make sure you're behaving?
10:29Mm, I guess.
10:32So is this jazz audio?
10:33This is jazz audio.
10:36Your love is all I breathe.
10:431985 called, and they want their store back.
10:47What's going on here?
10:48Okay, so these are a soundboard, these are speakers.
10:52Why are these empty?
10:53Sold them out of the board.
10:54How long ago?
10:55Too long ago.
10:56How long has this stuff been in the case?
10:58Uh, God, that stuff has been in that case so long that none of those radios are current.
11:05They all need to be changed.
11:06How many of these are out of production already?
11:08Probably half of them.
11:09So half of them, they don't even make any more?
11:11They don't even make any more.
11:12It feels like time stood still in here.
11:15And that technology changed.
11:18And then as you sold things, you just didn't replace it.
11:20I mean, there's a lot, just, just, there's, there's a lot of empty slots here.
11:24I agree.
11:25That's not a good look.
11:26It's a terrible look.
11:28When somebody walks in the front door, if they have a good experience and the parts are in inventory,
11:33their likelihood of them buying it is increased.
11:35And if they buy it, the likelihood of it going to the shop and giving those guys the chance to earn money is also increased.
11:41That's it.
11:43Sell more, service more, make more.
11:45It feels like you're not paying attention to the business.
11:48Just, that's my first impression.
11:50When I first met Gene the other day, he said...
11:52Now on Long Island, my store will take out a certain amount of, you know, square miles.
11:57So it's limited.
11:58Yeah, unless you have a bunch of stores.
11:59Is that your goal?
12:00That's my goal.
12:01There's this great concept to take across the nation and...
12:07Um...
12:08No.
12:10Michael, how long have you been here?
12:12About two years.
12:13And what did you do before this?
12:15I ran global operations for Alliance Bernstein for 23 years.
12:18Well, that's a big deal.
12:19Are you the manager?
12:20Yes and no.
12:21Which part is yes, which part is no?
12:23Well, I handle most of the interactions with the clients, sometimes with the retail,
12:28but I don't, like, directly order anything or control, you know, that type of stuff.
12:32Who does that?
12:33Gene.
12:35He used to manage a business a hundred times the size of this.
12:38His aptitude and his knowledge of being just a general manager of sorts is probably greater
12:44than Gene gives him credit for.
12:46And what is the inventory management?
12:48There really isn't one.
12:49There isn't one.
12:51No.
12:51Running any kind of business without an inventory supply chain system is really like deciding
12:57that you don't want to be in business anymore.
12:58Knowing what you have in real time, knowing what's coming, and understanding what to reorder
13:02is all about predicting how sales are going to flow through your business.
13:06But with Gene, not tracking the inventory is a problem.
13:09That's headquarters.
13:10That's me getting ready to put on a show.
13:12Who is?
13:12That's me.
13:13I always wanted to be a rock star.
13:15Tried to get a couple of record deals, and it didn't pan out.
13:18But I love music.
13:19So I opened up, you know, a stereo shop.
13:21I started out as an installer.
13:23I did sales.
13:24So this is mama.
13:26Who does the installations?
13:28They do my installers in the shop.
13:30Juan, Rob, Richie.
13:32So there's three installers?
13:34Correct.
13:34And one salesperson?
13:35Correct.
13:36And me.
13:37The installers, listen, I love them as people and whatnot.
13:40But do they need help?
13:41They need to get here on time.
13:43They need to be more assertive instead of just sitting on their ass waiting for a car to
13:47come in.
13:48Yep.
13:48And if I tell them they say anything to them, they'll just walk out.
13:51And I need a mechanic.
13:54You know, so they're not listening to me.
13:56So that's the real...
13:57Why don't they listen?
13:58They don't, because they don't care.
14:00They just want a paycheck.
14:01They're welcome to America.
14:03They don't want to work.
14:04It infuriates me when a manager or an owner of a business thinks that people are just sitting
14:08on their ass.
14:09Guys, this is Marcus.
14:10I just experienced no inventory on the shelf, but now you're accusing your technicians
14:14of sitting on their ass because there's no work?
14:16There's no work because there's nothing to buy.
14:19So the technician is my most favorite person in the whole world.
14:24It's been since I was a little kid.
14:25That would be me?
14:26I grew up in the auto business.
14:27I grew up in the shop.
14:29Okay.
14:29I grew up in the parts department.
14:31I was an assistant tech.
14:32I was a service advisor.
14:33So I understand the plight of the manager inside and the technician outside.
14:39So I get it.
14:41Technicians are the most important labor pool for me in the entire world.
14:45They are the driving force of everything that happens in this country.
14:48And they are underappreciated and they are underrecognized and they are underpaid.
14:52The other thing that I know about technicians, they don't say a lot.
14:56But when they do, you better listen.
14:57How long have you worked here?
15:0025 years.
15:01What?
15:02Yeah.
15:03You've been with him for, Gene, for 25 years?
15:0525 years.
15:06I've been here 15 years.
15:09So you guys like it here if you've been here that long?
15:11Well, I don't...
15:13It's okay sometimes.
15:16Sometimes there's just too much tension.
15:18What drives that?
15:21Who even came up with such a stupid idea?
15:23Where was the brain power to come up with that?
15:25There's two genes I always say.
15:26There's a happy gene.
15:29And there's an evil gene.
15:32There's the gene that will insult you.
15:35I'm saying you look cranky.
15:37Did you have a bad night?
15:37Did you get into a fight with your husband or something?
15:40Berate you.
15:40Richie, I'm killing myself, and you're sitting on your ass.
15:44You don't know what you're walking into.
15:46He'll blow up on some of the dealers.
15:49And we lost a couple of dealerships.
15:51Which is a lifeline of the business.
15:52Yeah.
15:53There are two distinct streams of revenue in an aftermarket business.
15:57Individual customers who walk in, and wholesale customers like dealerships.
16:01So no product to sell at the front of the store,
16:03and now you've pissed off all the dealers in your local area?
16:07How are these guys supposed to make a living?
16:09Richie, I'm Marcus.
16:11Nice to meet you.
16:12How are you?
16:13Good.
16:13How long have you been here?
16:14I started in 93.
16:17That's a long time.
16:18Mm-hmm.
16:19I'm getting the sense from Michael and from the other guys that most of you are unhappy.
16:24100%.
16:24He has good days, a lot of bad days.
16:27What are his good days like?
16:29It could be fun.
16:30And his bad days?
16:31He's just berated.
16:34Um, it's not right.
16:36I don't know why anybody would do that to somebody, especially somebody that's worked for you for
16:41that long, made you money.
16:44How hard he is on Richie is just, it upsets me.
16:47I think it'd be helpful if you guys are open to it, where the five of us have an honest conversation once and for all.
16:55That would be tremendous.
16:56Let's see if Gene's available.
16:58This is a bigger challenge than I ever thought that I was signing up for.
17:02And it's a smaller opportunity than I thought I was signing up for.
17:07Do I care at this point?
17:08No, because I'm so pissed off and I'm so fired up about the way the guys in the shop are treated
17:14that I don't care how much time I have to spend here.
17:16I'll feel good about it.
17:18And that's all that matters.
17:19What I think is broken is the relationship between you guys.
17:22They have a lot to say.
17:23You have a lot to say.
17:25Best thing to do is flush the toilet so the s*** doesn't sit in the bowl anymore.
17:29Yeah.
17:30I have no problems starting at all.
17:33My big thing has always been mutual respect.
17:38We've had this conversation many times.
17:40Is there a lack of respect for each other?
17:42I don't think you respect any of us.
17:43Why?
17:43Why do you feel that way?
17:45The way you are.
17:47I feel like some of you come in and you just want a s*** paycheck and that's it no matter how it is.
17:52That's not true.
17:54I'll tell you what.
17:54You put yourself in that shoe right there and you own the damn store.
17:58Would you pay me to sit on my s*** to do nothing?
18:01God, no way.
18:02You would f***ing never pay me to do that.
18:04Never.
18:05You would throw me out and go tell me to go to f*** home.
18:07And you guys know you would.
18:08Richie, get off your fat s*** sitting in the corner when I got no work going on.
18:12Come up to my office.
18:13Hey, you got anything you want me to do?
18:15I'd bite the bullet.
18:16Why the f*** are you singling me out right now?
18:23Richie, get off your fat s*** sitting in the corner when I got no work going on.
18:27Come up to my office.
18:28Hey, you got anything you want me to do?
18:30I'd bite the bullet.
18:31Why the f*** are you singling me out right now?
18:32No, I'm just looking at the whole crew.
18:34I'm just looking at the whole crew, bud.
18:35That's all.
18:36Not just you.
18:37I'm looking at the whole crew.
18:38Well, you did call him a fat s***.
18:39Well, I apologize for that.
18:42Well, my people process product model is a little busted right now.
18:46Because there is no product in inventory.
18:50They have zero process.
18:52Zero.
18:54And the people are...
18:55How about when I go out and do $1,500, $1,600 and 4 o'clock you want to get rid of me because now it's dead?
19:02It ain't my fault you're so fast.
19:04You're getting paid for three hours.
19:05So I'm productive is what I'm saying.
19:06Dysfunctional?
19:09Should we go with that?
19:10But there's no reason for you to get...
19:12I'm not agitation.
19:13Bring the agitation on me.
19:14Juan, I need you to get here at 9.30.
19:17I mean, yeah, I know.
19:18You think it's funny, but that's f***ing costing me money.
19:21I'm a businessman.
19:23What's your thought on what he's saying?
19:25No, I just say he's right, you know.
19:27So you agree with him?
19:28Yeah, I do.
19:30Right.
19:30But you can deliver that same message a totally different way.
19:34And the fact that he just acknowledged it is a pretty good thing.
19:39The fact that he's productive is a pretty good thing.
19:42Crazy.
19:43The fact that you called him names, not a good thing.
19:46Got it.
19:4725 years?
19:4830-something years?
19:49Mm-hmm.
19:5015.
19:50So there's some reason, against their better judgment, that they stay with you.
19:57Can you imagine if they actually liked working here, how much better the business could be?
20:03Well, I'm hoping you're right.
20:05Oh, I know I'm right.
20:06Okay.
20:07I know I'm right.
20:08But the machine is not working.
20:09It's broken.
20:10So either we fix the machine, and you fix it my way, or I'm going to leave and never come back.
20:17Those are the choices.
20:19We'll make it right now.
20:20You want me to help you fix it, or do you want to just let it just die?
20:23I'm with you.
20:24100% in.
20:25I'm with you.
20:26Okay.
20:27Come prepared to work your ass off.
20:29Okay.
20:29I'm ready.
20:30Me and my guys, you know, we're button heads.
20:33I don't really hate them, but they do aggravate the crap out of me sometimes.
20:37And Marcus does see that.
20:38And Marcus is going to help me try to fix it.
20:42Jazz audio could use an infusion.
20:44I'll change the name to Marcus Costerio.
20:48I have no problem with that.
20:49Everybody's coming to see Gene.
20:52As far as I'm concerned.
20:58Anytime I walk into a business, I always want to go under the premise that I'm going to leave it better than I found it.
21:04And this business is broken with people.
21:06That's Gene.
21:06Has no process, no inventory system, and literally has no product.
21:10And so we're going to have to rebuild the basic building blocks of any business.
21:14Bring inventory in, renovate the store, put a system in place, and then I can figure out if there's even a deal here at all.
21:21We're going to start over.
21:22We're going to get this business back on track with the right inventory, and we're going to start chucking any of these parts and pieces that don't work that we know are obsolete.
21:30For as much time as it takes to get the store renovated, I'm going to cover the payroll.
21:35All right?
21:36Let's get to work.
21:44What's going on?
21:45Marcus and me and the boys are tearing apart your eyes on you.
21:49Oh, my, my.
21:50Marcus, you don't know how bad I've been wanting to do all that.
21:53Well, why haven't you?
21:54Why is that he won't let me touch anything?
21:57I've been wanting to redo the shop and get this place ship-shaped, you know?
22:01So having Marcus come in and get the ball rolling was a big plus.
22:05I feel like I had him on my side.
22:08Michael, can we throw this out?
22:09I don't even care what's in here.
22:10I never go through it.
22:11I do.
22:12That's bothering you?
22:13That is bothering you?
22:14Yes, ma'am.
22:15Oh, my God.
22:19Oh, yeah.
22:20That's right.
22:20There's wires.
22:21It's going to fall.
22:22I knew Marcus was going to do something.
22:24I didn't know it was going to be this extreme.
22:26Somebody's got to grab one.
22:27You think, look at your feet.
22:29When I seen him tip over the soundboard, I knew the showroom was in trouble.
22:34Yeah.
22:3516 years later.
22:37It's empty now.
22:40Wait.
22:41See?
22:42See?
22:42That was better.
22:43That's why you do it.
22:46Marcus, you know what?
22:47Nobody knows half the shit I do.
22:49Nobody knows half the stuff that I do.
22:51That's life.
22:51That's life.
22:52That's my choice.
22:53I picked it.
22:54I chose to open this store.
22:55I chose to open this store.
22:56I chose to open a taco store.
22:57They call a dealership.
22:58You have a taco place?
22:59I do.
23:00What else do you have?
23:01Shell and Bagel.
23:02Okay.
23:02What else?
23:03Well, used car on the street, too.
23:04I forgot to tell you.
23:05Okay.
23:05Who runs the used car place?
23:07Oh, I have people for that.
23:07I got a partner.
23:08Who runs the bagel shop?
23:09Benny's there every day.
23:10He runs it.
23:11Okay.
23:11Maybe this particular business shouldn't have so much gene in it.
23:15I love that.
23:16I would love that.
23:17And maybe it should just be about these guys.
23:20You should put a manager in place.
23:22And you pop in and out.
23:24I would love to.
23:24Okay.
23:25Look, I understand that this is Gene's first business after being a rock star.
23:29And I understand the love affair that everybody has with their first business.
23:32But for this business to actually survive and prosper, Gene's going to have to put somebody
23:37else in charge.
23:39So, basically, what's going to happen here is I'm going to remove myself a little bit
23:44from the store.
23:45Michael is going to be general manager.
23:48He's going to be running everything up front.
23:50He's going to be doing it all.
23:52You know, the buck's going to stop with him with customer satisfaction, efficiency of the
23:57shop, my inventory.
23:59You're going to have to deal with me more.
24:01Oh.
24:02It's all right.
24:03I'm fine.
24:03I love Mike.
24:04I'm fine.
24:04Fine or it's a good thing?
24:06It's good.
24:06Okay.
24:07When Michael is the manager now, I'm going to step back.
24:09And it's very hard.
24:10It's very hard to step back.
24:12I'm going to tell you something, because I got 45 years of my life into this store.
24:15But Gene's got enough work.
24:18If you can turn the camera around and look at Gene's desk, Gene's got enough work to keep
24:22him busy until he's 75.
24:24Even though we butted heads up until last Friday, whatever, I still believe we got the best stereo
24:29shop on Long Island.
24:30We got the best installs.
24:32And if there's a problem, you can come to me.
24:35Okay?
24:35But just don't come to me with a stupid problem.
24:38You were doing good.
24:39You were doing so well.
24:41You were doing so well.
24:44All right.
24:45Okay.
24:45Just...
24:45Back that up?
24:46Yeah.
24:46Just back that up.
24:47You guys are awesome.
24:49You guys are awesome.
24:50We've been here together for 30 years.
24:52You know what I mean?
24:52You guys can work anywhere.
24:53You don't need to work at Jazz Audio.
24:54You can work anywhere.
24:56But somehow you guys all choose to work with me.
24:59And I appreciate that.
25:00And I thank you.
25:01Now that Michael's the general manager, I have a high expectation that he's going to drive
25:05business through the front door or finding dealerships to do business with, all while managing
25:10the inventory at the store.
25:12All right.
25:12Let's finish the work, guys.
25:13Let's do it.
25:14Let's finish the shop.
25:16You're disappointed with the bottom line?
25:19Well, yeah.
25:19Like, you're working your ass off for that.
25:22Yes, I am.
25:24Something's got to change.
25:25Gene, you ready to say goodbye to the old Jazz floor?
25:36Here it goes!
25:39Rubble, coming down.
25:41Michael, I want to walk you through the upgraded QuickBooks that I want to put in the system.
25:47Okay.
25:47I need somebody to track all of the assets, all of the cash, all of the liabilities at
25:52all times.
25:53How do you track your receivables today?
25:55Yeah, for argument's sake.
25:57And then I saved the paperwork here.
25:59So they sent me the check.
26:00I print it out.
26:01But is all that recorded in QuickBooks?
26:03No.
26:04No.
26:04It needs to be.
26:04Okay, that's what I'm saying.
26:05No, I use just this.
26:06So you bring in inventory, you log it into QuickBooks.
26:10You sell inventory, you record it in QuickBooks.
26:13Because all this paper craziness is what leads to things being out of stock, parts missing,
26:19you not feeling comfortable if things are walking away out the back door.
26:23It's a tracking mechanism, it's an analytical mechanism.
26:26Yeah, no, we can eliminate a lot of steps.
26:28There's a lot of room for error in that.
26:30There's a lot of steps.
26:31I think when I was 12 and I had my candy business, I had a better system than you.
26:38What are you trying to say?
26:39So part of the reason why I wanted to come here is that I'm looking for margin expansion
26:48for the business.
26:49Is there somewhere we could look at product?
26:51Absolutely.
26:52Yeah.
26:52Can we go into the warehouse?
26:54Yeah.
26:54One of the first moves I want to make is to improve the way the company thinks about inventory.
26:59So I'm taking them to a regional distributor that will give them access to innovation,
27:04real-time inventory, and much better margins.
27:07Can we pull stuff and just put it on so we understand what we're doing?
27:10One of the side benefits to doing this with Michael and Gene is so I can see how Gene behaves.
27:15This is Michael's first opportunity to step up as the leader,
27:18to build that relationship with the distributor, and to show Gene that he's qualified.
27:22This is a great piece, and if I'm correct, you came in at a great price point.
27:26It's also the test to see if Gene can zip it.
27:30So I was thinking, you know, the JVC, the Alpine, that those are great.
27:35You got a wireless one?
27:37The $6.95.
27:38I appreciate Gene getting up in there, but I think you have to remind him not to go back to his old ways.
27:45He's doing it right now.
27:46I don't want to spend the extra money.
27:47What I would ask you to do is politely say to him, listen, Gene, I'm going to handle this.
27:56And then I would ask them, what other things do you guys recommend?
28:00What are you seeing?
28:01What's new?
28:02What's innovative?
28:02I want to pull from their knowledge.
28:05So go ahead and jump in.
28:09So what I was thinking was what the client base has been looking for
28:14and see if they can give us some recommendations on what the best, you know, options are for us.
28:20That's fine.
28:22Difference between having just a regular BT screen.
28:26Let him make you see.
28:27What categories are emerging.
28:29Come here for a second.
28:30What's hard for you about this?
28:32Letting go.
28:32What's hard for you?
28:34Because I'm a control guy.
28:35I put 35 years of my life into it.
28:39It's like you, walking away from camp world after you did all that.
28:42So here's the thing that I learned.
28:44Tell me.
28:44Just my own advice.
28:46For years, I thought I was the only person that could do anything there.
28:49Okay.
28:50And what I learned over time is that when I brought in people that were so much smarter than me,
28:55they had a different perspective than me.
28:58They approached people differently than me.
29:00The business actually flourished more.
29:03It worked.
29:03And my job was to organize and collect all the smartest brains in the world to run the business that I had started.
29:13How are you doing?
29:13Mike is going to be your sales guy?
29:14Okay.
29:15I appreciate the fact that you're letting Michael represent your business.
29:19He's going to place the order.
29:21You're going to take a deep breath.
29:23Okay.
29:23Perfect.
29:24I have the aid here.
29:25Mike, just so when we're done, we just pay.
29:28Yep.
29:28Okay.
29:29I want Gene to understand how committed I am to improving his business with him.
29:34And paying for the inventory right now is a good way to make a good faith effort towards that.
29:39But I want to see how they handle it.
29:40It's the final step in determining whether I even want to do a deal here or not.
29:44Mike, look forward to working with you.
29:46Thank you so much.
29:47Now that Michael's taking control of rebuilding the inventory, I want him to develop new relationships.
29:52So I'm taking him to a local dealership so I can see how he performs.
29:58Hi, Aaron.
29:59Michael.
30:00Michael, Aaron.
30:01How are you?
30:01I'm Marcus.
30:02I've been running this dealership for 12 years.
30:04We don't even know all of the services and accessories that you guys provide.
30:09So we're going to put a marketing deck together that gives you everything that we believe we can provide to you.
30:14Yeah.
30:15You give us a fair price and make it quick, easy, and efficient.
30:18We're all in.
30:19I'm going to teach Michael how to use technology to actually understand who his whole customer base is.
30:25Salesforce is a technology platform that will allow Michael to understand every single customer that walks through the door.
30:33How to manage the account, how to communicate with them, and how to get the most out of that relationship.
30:39Bye.
30:40I have to be honest.
30:50I think the space looks really good.
30:53One of the benefits of Marcus coming here was getting everybody to work together, to refresh the store.
30:59We tried to make it, like, more inviting.
31:03I love the way it turned out.
31:04It feels so much better.
31:05It feels like a whole new store.
31:07You guys have to move back a little bit, because I'm going to show you what's behind the curtain.
31:13One of the things that I think is important is that a business never forgets where it started, and it understands where it's going.
31:19And with Michael being the general manager and the shop being cleaned up and new inventory coming, it's a fresh start.
31:25But I also think it's important to recognize the work, Gene, that you've done to get us here.
31:30And whether there was twists in the roads and bumps in the road, you still have had a business that's lasted for a long time.
31:38And I think a lot of people dismiss the fact that a business can last for 25, 30, 35 years, despite all of its dramas.
31:45So I'm going to show you something that I hope you enjoy.
31:50Okay.
31:51You ready?
31:51I'm ready.
31:52Oh, Mike.
32:11Who's that good-looking guy?
32:12Awesome.
32:13That is awesome.
32:15Marcus, give me a hug.
32:18That is awesome.
32:20Nobody he loves more than himself.
32:21Look at Gene.
32:22He's always showing people that picture.
32:24Which one?
32:24Look at me with the hair.
32:25And now everyone's going to see it.
32:26They always say, that's not you, and then I've got to show them my tattoo.
32:29We believe you.
32:30You don't have to take your clothes off.
32:31We're good.
32:32One of the things that I wanted to accomplish in addition to paying homage to your past.
32:37Is that if this is the sales counter and people are coming in, this is a conversation starter.
32:42It shows that you're in the business that you believe in.
32:47Him and the rest of the guys are going to lay out the floor.
32:50Okay.
32:50The three of us are going to go next door to the bagel store.
32:54I want you to bring your financials with you.
32:56Okay.
32:57Print out like last year's numbers.
32:58Okay, fine.
32:59Okay?
32:59I can do that.
33:00Let's do that.
33:01And then we're going to meet next door and sit down and talk a little turkey.
33:04Talk turkey?
33:05Okay.
33:05I don't like turkey.
33:06Too bad.
33:07Yes, you do.
33:08Now that I've spent time with Gene working on the people, the process, the product, it's time to sit down to really understand, is there an investment opportunity here?
33:17And what I'm thinking about is the kind of deal that would be unlike anything I've ever done before.
33:23What's the business need besides the people, process, and product?
33:32Profit.
33:33Needs money.
33:35Needs some money.
33:36It looks like last year the business did almost $900,000 in sales.
33:40$239,000 in gross profit, so that puts the margin at around 27%.
33:49Total expenses of $190,000 against $239,000 in gross, and a profit of $48,000.
33:59Call it $50,000.
34:02Not a lot of money in the bank.
34:04No, not too much.
34:05I'll put some money into the store.
34:08He made $50,000 this year?
34:10The company did.
34:12Really?
34:13That's it.
34:14You're disappointed with the bottom line?
34:16Well, yeah, like, you're working your asshole for that.
34:20Yes, I am.
34:21Okay.
34:22Something's got to change.
34:24It's clear to me that Gene doesn't know his numbers, because when I met him, he told me that his business was doing $1.3 million in sales, and it had profit of $400,000.
34:34That would normally be on the bottom line.
34:36What's your total revenue?
34:37Bring it in, like $1.3.
34:38And on the bottom line?
34:40What, net profit?
34:42Yeah.
34:42$400,000?
34:43$450,000?
34:44What Gene misrepresented is that he meant gross profit.
34:48That's the number right underneath the revenue number.
34:51Then there's all the expenses, and then there's the bottom line.
34:54The bottom line is not $400,000.
34:57It's $50,000.
34:59And I'm going to maneuver my offer around $50,000, because it would be worth way more if it actually made $400,000.
35:06How much is the inventory that was just purchased?
35:09Right now, I think you spent about $30,000.
35:12I think I didn't see the receivables.
35:14I think between what I wired and what I put on my cart, it's close to $50,000 now.
35:19Right.
35:19You might be close to $50,000.
35:21That's how much I have in.
35:22Right.
35:23I'd like the $50,000 to stay in the business that I put in the inventory.
35:27Well, that's very kind of you.
35:29And I'd like to have some equity for it.
35:33Okay.
35:35I'd like to think about that.
35:37You'd think about it right now.
35:38No, I can't make a decision that quick, Marcus.
35:40Not to be disrespectful.
35:43I'd love to have you as a partner.
35:44I'd love to do what I'm supposed to.
35:44Well, I made the decision to put the $50,000 in.
35:46You did.
35:47Because I knew that the business needed it, and I knew you needed it, and I knew the people that work there needed it, and I didn't even hesitate.
35:55I can make the argument that you did it because you wanted to help a small business.
35:58I don't do anything in business for charity.
36:01I don't believe in handouts.
36:04So, basically, you want a piece of my store?
36:06Well, I put money in.
36:07Right.
36:07You want a piece of it.
36:08Right.
36:08That's fine.
36:09I put money in.
36:09I got it.
36:10How much equity are you looking for?
36:12What's the $50,000 that I put in worth?
36:1510%.
36:16So, the business is worth $500,000?
36:19My business took 35 years of my sweat and blood to get it here.
36:23You know, you gave me $50,000.
36:25I'll give you a $50,000 back.
36:26You know, if that's what you want, I'll hand you a $50,000 back.
36:29I got, you know, if that's what it takes, that's what it takes.
36:31But I'm not giving up half my store for $50,000.
36:34It took 35 years of my sweat and blood to get it here.
36:40But I'm not giving up half my store for $50,000.
36:42Did I ask for half?
36:43No.
36:44Then why would you accuse me of asking for half?
36:46You reacted to me as if I was reaching into your pocket trying to take something from you.
36:51I think that's wrong.
36:52I don't think so.
36:53I just said $50,000.
36:53I'm telling you how I perceive it.
36:55Okay.
36:55It's the same way your people perceive it when you tell them to sit their fat ass down or get off their fat ass.
37:01You go from zero to 100 really fast.
37:04Instead of just taking it slow and having a dialogue and just talking about it.
37:10So now I'm asking you, what is everything that we've gone through plus the $50,000 worth you?
37:15Because the $50,000 is just money out of the account.
37:19Yeah.
37:19The time that I spent with you and the things that you say that you've learned from me have to be worth $50,000.
37:26100%.
37:27Okay.
37:28So do I get any credit for flipping your ass like a pancake and getting you to think a different way?
37:37Well, okay.
37:39So I'll go up to 20% if you're interested.
37:44Is 20% something you could live with?
37:47100%.
37:47Love to have you as a partner.
37:48Okay, great.
37:49Love to have you as a partner.
37:50Yay!
37:51Fantastic.
37:51Can we go talk to your team?
37:53Sure.
37:53Okay.
37:55You know, I don't like making spur-of-the-moment decisions.
37:58I don't do that.
37:59What?
38:00I didn't want to lose the deal.
38:01And I believe he can still bring a lot to the table.
38:03So I believe the 20% I gave up, it's fair.
38:07Why don't you tell them what just happened?
38:15I'm going to give Marcus, so you're going to team up.
38:17You're not giving me anything.
38:18No, Marcus bought in.
38:22Marcus now owns 20% of jazz audio.
38:24He's coming aboard.
38:29We did make a deal for me to buy 20% of jazz audio.
38:32But I like to buy and sell things.
38:35So do any of you have any money in your pocket?
38:38Uh...
38:40Do you have a dollar?
38:42You got a dollar for one, too?
38:44Can I have your money, please?
38:46One dollar, two dollar, three dollar, four dollar.
38:50I just sold my interest to them for four dollars.
38:55You guys now own my 20%.
38:57Here you go.
39:00Today's your lucky day.
39:01Richie, Rob, Michael, and Juan, you will equally own the 20%, 5% apiece.
39:08And no more nonsense about you're the owner and they're the workers.
39:14This is your business, too.
39:16I'm excited because I think it's always a good motivation to say you're part of something.
39:23I'm glad you did that.
39:24I like the way you flipped it.
39:25Right, you flipped it and you did an awesome job.
39:28There's a pot of gold at the end of the rainbow.
39:30We just got to get there.
39:31Now we're getting there together.
39:32Well, you guys should actually have a monthly financial review.
39:36And Michael's going to help lead that because he's going to have access to Salesforce.
39:42You're going to have all the data that you need to understand how to run the business.
39:45If the business makes 300 grand, that's 15 grand a piece extra for everybody.
39:50The more money you guys make, the more money I'm going to make.
39:53That's the right way to think about it.
39:55I said something right?
39:56That's finally, finally.
39:58These individuals who have been with him for 15, 20, and 30 years are the backbone of his business.
40:06And I wanted him to see value.
40:07I also wanted them to recognize the value that I see in that type of labor force.
40:12I also wanted the employees to understand that it's your business and your shop and your customer and your inventory.
40:19And when people take an ownership mentality, they have a totally different mentality.
40:24Thank you for giving me the chance.
40:26I appreciate it.
40:27Thanks, Marcus.
40:28Nice meeting you.
40:29Thank you very much.
40:30It's a great investment because it's an homage to every technician that I've ever worked with since I was a little kid who taught me the value of hard work and a long day.
40:40That was a small price to pay to recognize an audience that I think is underappreciated.
40:45Thank you, Marcus.
40:48Thank you for making it all work.
40:49Oh, thank you.
40:51Marcus, thank you so much.
40:52It's so nice to meet you.
40:54By the way, everybody's got my number.
40:56They will when I leave.
40:57If you misbehave.
40:59Oh, give me your number.
41:03See you guys.
41:06What's the...
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