Talbot is trying to sell his latest product -- home-made "Happy Caps", which are designed with an extra large peak. Telly tries to wear one of the caps, but he keeps whacking Elmo with the peak whenever he turns around.
Telly tells his uncle about the problem, and Talbot adds rear-view mirrors to the cap. When that doesn't work, Talbot then tries to pass the cap off as a butterfly net, or a giraffe-tickler. At the end of the day, he asks Telly to help him sell silly-looking glasses as "Happy Sunglasses".