The Profit Recap: The Sound of Silence

The Profit

Overtone Acoustics
Season 4 Episode 15
Editor’s Rating *****
Photo: The Profit/CNBC

Overtone Acoustics is an Orlando-based company that makes something that I, a noted expert of business (not to brag too much about my credentials, but in addition to The Profit, I have also seen many an episode of Shark Tank), am genuinely impressed by.

Okay, so: People buy acoustic panels to control the noise level in a room. But unlike its competitors, Overtone’s high-quality entries into this field don’t just absorb sound in a space — they’re also entirely customizable. Through a “sublimation” printing process, they can dye the canvas on a panel’s face while keeping it “acoustically transparent,” which means the sound can still be absorbed by the foam within. That way, there isn’t just a big, plain waste of space hanging on your wall; there’s art. (They also make cool-looking 3-D “diffusers,” which do the opposite, imbuing a room with a sense of “liveness.”) Founded by Brad Turpin in 2011, Overtone normally sells to customers with recording studios and home theaters to improve sound quality and reduce echoes therein.

Naturally, Marcus Lemonis appreciates that their products are both functional and decorative — and he also thinks that Overtone could branch out far beyond their current client base. They could deck out restaurants, hotels, bars, offices, you name it. But first, we’ve got some serious problems to address.

(1) Overtone’s 1,000-square-foot headquarters are much too small. Their teensy warehouse-slash-manufacturing facility doesn’t have ventilation (who needs air to breath when you can fill your lungs with sawdust?), any room for machinery, an assembly line, or a shipping and receiving area. “We’re in a shoe box,” Marcus says. “It’s virtually a garage.”

(2) Once upon a time, Overtone employed three full-time employees. But then sales slowed down and layoffs followed. Their lack of cash led Brad to employ a “volunteer” workforce that includes college interns as well as his brother. Sorry, guy, but this is not a nonprofit. (At least, it isn’t on purpose.) How is Brad getting all of these people to agree to chip in for free, anyway? Is this a mass hypnosis situation? (If so, here’s a free business idea: Host a weekend-long seminar teaching fellow entrepreneurs your evil ways for $1,000 a head.)

(3) Then there’s Alex, Brad’s childhood best friend, who is giving 100 percent to a business of which he owns zero percent. (Brad is the sole owner.) Alex is in the military reserves because “we” need capital. Not only is he not getting paid by Overtone, he can’t afford a place to live. When he isn’t on orders, he sleeps at a friend’s house in Jacksonville and drives the two hours to work every day. Marcus points out that this arrangement is bizarre, and Alex gets it: “I’m in too deep,” he says. Brad, too, is pushing himself to the limit, either couch surfing or crashing at the office.

(4) Let’s just say that Brad, committed though he is, is not a born salesman. When Marcus asks Brad to pitch their products to him, he says, and I quote, “It’s nothing too special.” If you cut a mouth and eyes into the foam interior of one of Overtone’s panels, it would be a more charismatic and persuasive presence than the company’s human founder.

For all his concerns, Marcus smells money here. A panel that costs $10.50 to make in a mere 15 minutes will sell for $55. To quote Marcus, those margins are “sick.” (That’s a technical business term.) He reviews Overtone’s financials with Brad: The company’s revenue has been growing steadily since they launched. Last year, they made $300,000 and their net profit was $32,000. They have $7,000 cash in the bank, plus a $5,900 receivable on the way. But they also owe $30,000 in liabilities — not to mention that Alex has never, ever been paid back for any of the money he put into the company. Brad himself has staked an amount in the tens of thousands. He used to pay himself $500 a week, but not for the last six months.

Business Dad sits down with Brad and Alex at a really loud bar. He tells them how much he admires their willpower and sacrifice. More important, he makes an offer of $200,000 to go toward employee wages as well as working capital for raw materials and inventory. But investing in Overtone is a big risk, so Marcus’s bottom-line equity ask is 50 percent, with Brad — who isn’t thrilled about giving up majority ownership of the company — and Alex to divide the other 50 percent as they see fit. Well, almost as they see fit. Brad and Alex agree on a 40-10 split, but Marcus isn’t having that. He lowers his own stake to 40 percent and raises Alex’s to 20 percent, in deference to Alex’s contributions to the company. Unlike in baseball, Alex proves, there can be some crying in business.

Marcus takes his co-owners to NAMM, an enormous music trade show, where his company SJC Drums will be an exhibitor. SJC has made space for Overtone to display some of their wares, too. Business siblings! But Overtone’s showing at NAMM is less than spectacular: From the promotional posters they’ve brought, it looks like the company is selling speakers or equalizers, not acoustic panels, and they don’t have any informational pamphlets to hand out. This is essentially a costly, time-consuming, and not fun game of Guess the Product. Their sales strategy is perhaps even less fun: Alex is enthusiastic, but he’s all over the place, talking animatedly to passersby about their hypothetical man caves. Meanwhile, as Marcus puts it, “Brad is preparing for his nap.”

Back at the Orlando office, Marcus learns that (1) Overtone is late on fulfilling an order for Google (perhaps you have not heard of “Google,” but it is quite a large company, well known to those of us in the business world) and (2) relying on untrained college kids to put the panels together. Their workmanship is clearly shoddy. When Marcus points out how uneven the wood blocks on a diffuser are, Brad tries to argue that this is part of the piece’s “unique quality,” Marcus fixes him with a GIF-worthy withering stare. He won’t tolerate inferior products.

The good news is that Marcus has an idea: What if they up and move to Pennsylvania? They’ve got no infrastructure in place in Orlando, and he already has a decked-out and well-staffed 75,000-square-foot manufacturing facility in Allentown for his custom design business, Precise Graphix. Brad and Alex are in.

The Precise Graphix facility is clean and cavernous, the perfect backdrop to a stirring newsreel montage about the Glory of American Industry. But there is to be no couch surfing in the Keystone State. Marcus has rented Alex and Brad a townhouse to live in. “I wouldn’t normally find new business partners a place to stay,” he explains, “But having their home life be stable will help keep their eye on the prize.” Suuure, Business Dad, whatever you say. It’s hugging time!

With all the resources of Precise Graphix at their disposal, the Overtone boys see an immediate boost in productivity. They can make in one hour a product that previously would have taken them two days to build. Now, they just need someone to buy this stuff. After a selling practice round with the CEO of Chicago’s Music Garage recording and rehearsal studios, Marcus poses an enormous challenge to Overtone: He’s secured them an opportunity to pitch for a “worldwide contract” with Hard Rock for their restaurants, hotels, casinos, everything.

But first, they’ll need to put together a “giant” presentation. Marcus doesn’t want to see anymore squares or rectangles — as an example, he has them put together a massive panel in the shape of an electric guitar.

Alex and Brad, who has far too many icons on his desktop, get to work. A confusing fight boils over between Alex, who wants to install LED lights in some of the panels, and Precise Graphix co-owner Dean, who tells him emphatically that they are not a light shop. We are not really given enough context to understand the nuances of their miscommunication, but after the Overtone guys drop $1,400 on LED lights, Alex and Dean have a shouting match. Marcus tells Team Overtone how disappointed he is that they’d show this kind of “disrespect” to Precise Graphix, and then Alex apologizes. Okay.

On the morning of their presentation at the Hard Rock Cafe Orlando, Overtone employees are way behind on installing the sample panels, while Brad and Alex are nowhere to be found. Marcus is so frustrated by their unexplained absence he bangs on a table.

Finally, the men of the hour show up, and Brad explains that they “had to go get haircuts.” Marcus is incredulous: “You had to go get a fucking haircut?!” My reality-TV spidey sense tells me that there is probably a little more to the story here — maybe a conniving producer told them they had to go get haircuts, right then and there — but nevertheless, I don’t recall ever seeing Marcus Lemonis this angry. And you won’t like him when he’s angry. Actually, you probably will, because he’s still a pretty nice and reasonable person.

Miraculously, everything comes together, albeit 45 minutes late. Ahem. But Joe Emanuele, the senior vice-president of design and construction for Hard Rock International, doesn’t seem to mind. Even more fortunately for the Overtone boys, the samples look amazing: a stylish shadowbox with LED lighting (perfect for hanging over a bar), a 3-D diffuser in the shape of overlapping piano keys, and plenty of opportunities to customize their wares with the Hard Rock logo or the silhouette of an iconic artist. Emanuele is into it. Hard Rock is constructing a 450-room hotel in New York with cabaret at the bottom — and they’re interested in working with Overtone. Marcus calls this the best sales presentation that he’s ever been a part of.

… at least, for now. Who knows what business adventures next week’s episode will hold?

The Profit Recap: The Sound of Silence