- "Cobra Kai is about being badass. And the baddest badass is the one who beats his opponent when he's at his strongest. Not when his back is turned. Not when he's injured!"
- ―Johnny Lawrence[src]
In the aftermath of Cobra Kai's win at the Under 18 All Valley Karate Championships, Johnny questions his dojo's philosophy and deals with a figure from his past. Daniel searches for the right way to respond to Cobra Kai's dominance.
The episode opens with a reiteration of the final scene of the last episode as John Kreese enters and announces his return and pride over Johnny bringing Cobra Kai back to the top. Johnny exclaims that he believed Kreese was dead, to which Kreese explains that he went away for a while and rejoined the army. Johnny and Kreese fight, to which Kreese initially gains the upper hand, but Johnny is eventually able to turn the tables around, and put his former master into a choke hold, getting revenge on Kreese for receiving the same treatment by him after the 1984 All-Valley Tournament, and recalls that night. As he remembers Bobby saying "You're gonna kill him!", Johnny realises what he might do to Kreese and as a result, lets him go, showing mercy. Exploiting this, Kreese takes down Johnny with a leg sweep and delivers an elbow to his chest. While both are lying on the ground, Kreese's cigar, which was thrown into the trash, ignites and sets off the sprinkler system.
The next day, Daniel and Robby are at Mr. Miyagi's old house as Daniel removes the tarps from all of his old cars. Robby and Daniel get to work cleaning and repairing the house and preparing it for a dojo for Miyagi-Do. That night, Daniel returns home to Amanda and Anthony. Amanda claims that Samantha is upstairs, sulking about Miguel, and Daniel announces the opening of Miyagi-Do. Amanda expresses her concerns with Daniel being able to balance everything, to which he claims he'll be able to balance it. In her room, Sam is browsing Miguel's Instagram before blocking him, she then views Aisha's live Instagram story.
Aisha, Moon, Hawk, Demetri and Miguel are celebrating their victory, however Miguel is distracted by the fact that Samantha has blocked him on her social media. Aisha and Hawk attempt to comfort Miguel, but it's useless.
That same night, Johnny is in his apartment and is greeted at his door by Carmen who presents him with a dessert called "Tres Leches" (three milks) . Johnny and Carmen talk, and she expresses her thanks to Johnny for giving Miguel confidence, but also her concerns about Miguel's occasional aggressiveness during the tournament, however brushes it off as his "game face". As a response, Johnny tells her that Miguel is a good kid, and he will keep him on the right path. Johnny's phone rings, and when he answers, it's Kreese who tells him to meet him at Smitty's Diner at 8 in the morning so he can explain himself.
The next day, Johnny meets Kreese at the diner where he discusses his life after Cobra Kai, which included enlisting in the army again, and taking down various high-level criminals. Kreese tells Johnny how he is weakening his students and how he has to toughen them up. Johnny ignores his advice, claiming Cobra Kai to be just him from this point on, and leaves Kreese in the diner.
While Daniel is at Miyagi's house with Robby doing further preparations for the new dojo, Robby discovers different items that belonged to Mr. Miyagi, including the two banners on which the rules of Miyagi-Do karate are written. When Daniel explains the first one being "Karate is for defense only.", and the second once reinforcing the first, Robby still expresses his desire to get back at his father, which leaves Daniel shocked.
Hawk and Miguel arrive at the dojo and meet kids who want to join Cobra Kai and Hawk scares them for fun. As they enter, they discover the traces of the fight between Johnny and Kreese, which they mistake for a victory celebration. After Johnny appears and send the new applicants away and tells the them to return the following day, he scolds Hawk and Miguel for their unsportsmanlike behavior towards Robby Keene at the tournament. Then he forbids everyone from any more "pussy moves", and tells them they will learn to fight fair from this point on. As punishment, he strips everyone to white belt, and makes Hawk and Miguel do 50 pushups on their knuckles. Later Miguel questions him, and Johnny tells him that he doesn't want them repeating the same mistakes he did.
Upon their departure, Aisha crosses paths with Sam in the parking lot who asks if she wants to hang out. Aisha turns her down as she has to go to Hawk's house for their Cobra Kai homework, however invites Samantha to come with them, which she turns down, and leaves.
Later that day, Daniel and Robby goes to the hardware store, where they bump into Johnny. After Daniel briefly leaves the two of them alone, Johnny tries to clear things up with Robby, only resulting in the rift between them growing, when Robby tells his father that Daniel is a better man than he will ever be.
As they get home, Daniel sees that Sam has resumed her training, and has a brief conversation with her about her grief over the breakup with Miguel. At one point, it comes to Cobra Kai, and when Sam says she doesn't want to fight them, it leaves Daniel doubting his own attitude.
In the evening, having finished the construction of the Miyagi Dojo, Daniel meditates. After clearing his mind, he tells Robby he will not destroy Cobra Kai, because they aren't the enemy. Instead, he plans to show them and all the other people in the Valley a better way. Then Sam arrives to tell she would like to join their training, and Daniel welcomes her.
Meanwhile, as Johnny is fixing the damage done to his dojo during his fight with Kreese, his former master enters, apologizing for how he treated him as his student, and for what he did to him in the parking lot after the All-Valley Tournament in 1984, and asks for a second chance. Before he leaves, he presents Johnny with his second-place trophy which he fixed for him after breaking it. Being moved by Kreese's seemingly sincere apology, Johnny goes after him, and asks him to wait. Knowing he's managed to regain Johnny's trust, Kreese smiles sinisterly.
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