BBC Two’s hit business show Dragons’ Den returns to our screens later this month with new Dragon James Caan, founder and CEO of private equity firm Hamilton Bradshaw, set to join Deborah Meaden, Duncan Bannatyne, Peter Jones and Theo Paphitis in grilling would-be entrepreneurs.
Cann’s clear about the attraction of joining the show, “this is very similar to what I do in my day job,” he explains. “I am a professional investor and I have a 20-year track record of investing both in people and businesses, so the appeal was that it’s something I’m very comfortable with, something I’ve done before and something I think I’m probably quite good at,” he adds, matter-of-factly.
He also thinks he understand the attraction of the show: “it’s very exciting because it’s real � it’s not reality TV” he says pointing out that participants “are real people who come to the Den with real ideas and we are real investors, not actors, and we are investing real money, which is our money,”
“If you’ve got a great idea you can walk into the Den and, within less than an hour, you can get the investment you’re looking for. That must be a spectacular result because, under normal circumstances, you’d have to go through banks and have various meetings and accountants.
“Whereas here, if you could get a decision in principle, subject to due diligence, on the day, within less than an hour, there must be a huge appeal to potential entrepreneurs who’re looking to raise money.”
A graduate of Harvard Business School’s prestigious Advanced Management Programme Cann concedes that it takes courage to make that seemingly endless climb up the intimidating staircase to face the no-nonsense quintet.
“I must admit I would have given you a very different answer before I’d been in the Den, but I actually think that I admire anybody who comes in, because it’s not as easy as it looks,” he confesses.
“On TV, you’re very quick to give views and opinions and criticise the person with their idea. But when you’re standing in front of five professional, successful entrepreneurs, who’ve probably been there and done it X number of times before, and who’re grilling you, one after the other, and you’ve got four cameras facing you, it’s not easy.”
How does he think the Dragons would cope if the roles were reversed? “they probably wouldn’t find it easy either…it’s very challenging and it’s certainly harder than it looks on TV.”
Viewers see only a small section of the grilling interviews, the length of which varies. “It depends largely on the quality of the opportunity,” explains James who, in 2001, won the Enterprise of the Year Award for his outstanding business success.
“For something that’s not very inspiring, probably 20 minutes. On the other hand, if you have something that’s an interesting idea, then it could be as much as an hour. There are no rules within the series that say, if you’re going to make an investment, you’ve got to do it within an hour. So to a large extent it’s completely up to the Dragons. We could actually go on for two hours if we wanted, to continue asking enough questions to satisfy ourselves that this is something that really makes sense.”
Because the Dragons usually invest an eye-watering sum, they have to be absolutely certain of a copper-bottomed opportunity.
“I must admit, when they asked me [to join the Dragons], my initial reaction was that it sounded really exciting and should be a lot of fun,” he says. “I thought it was going to be quite easy. And then, when I actually got into the Den, I found it much harder than I thought. I was genuinely surprised at myself, because I went in feeling pretty confident.”
James explains that he’s facing the accomplishment of a process which would normally take between 12 and 15 hours � “and that would be a very good and a very quick deal” � in about an hour.
“That was when reality set in,” he confides. “I’m sitting in the Den and I’m thinking, I’ve got five minutes to work the person out, I’ve got 10 minutes to work the product out, I’ve got three minutes to work out the financials and I’ve got two minutes to do the deal. And at the same time I’m competing with four other people who’ve been doing this longer than me, who’ve got a lot of experience.
“So on the one hand I’m under quite a lot of pressure because I’m trying to really concentrate on the opportunity and the idea. But at the same time, I’ve got to be so aware of ‘where’s Peter coming in, and where’s Theo coming in?’ Because obviously, if it’s a good deal, frankly, we all want it. You very rarely see a deal where one Dragon goes out on their own, with everybody else saying they’re not interested but he or she really believes in it.
He adds: “You’re sitting there, thinking that it’s �200,000 and it’s your cash. If you get it wrong, a lot of these are start-up ideas which means you are going to lose your money. And �200,000 buys a lot of Armani suits for me � so I don’t want to lose too many deals.”
James, who has homes in London and Cannes, has been creating, building and selling businesses for more than 20 years. In 1985, he set up the Alexander Mann Group, one of the UK’s leading HR outsourcing companies, and achieved a turnover of �130m before selling it to a private equity firm in 2002.
He also founded an executive headhunting firm which he successfully expanded globally through its Humana International brand and grew to more than 147 offices across 30 countries before it was bought by a New York-listed company.
Although James knew of the existing Dragons, he didn’t know them personally. But he says of his fire-breathing colleagues: “They’re really good people.” He admires their track records and their deals, and adds: “You’re with a very good bunch of people who are, without doubt, extremely successful in their own right, so it’s a really good panel to be part of.
“And they’ve been really friendly, very warm, and I think when you walk in to an existing situation where there’s already an existing relationship and everybody knows each other, it’s actually quite hard when you come in as a new person. But they’ve really gone out of their way to help me feel comfortable.”
James reveals, though, that as a new Dragon, it’s hard to clinch a deal. “What happens is, when somebody is looking for an investment, they tend to target a Dragon because of industry sector. So if you have an investment from somebody you’ve never heard of, somebody you’ve never met before, actually that’s not very appealing. So all of a sudden I find myself in a situation when I do like a deal and I’m competing with the investment, and the entrepreneur is more interested in going with somebody he’s seen on TV or he’s familiar with or he’s read about.”
He adds: “So I think, as a new Dragon, you actually have to work quite hard, not only with your money, but also to convince the individual that you can add as much value as everybody else.”
James, a married father of two daughters, has previously declared that he makes a point of investing in people, being a great believer that it is people who create a success in business through their passion and conviction � but is his Dragon persona friendly or formidable?
“I would say I’m quite balanced,” he comments, “because I think that with people who’ve never run a business before, it’s very important to treat them as adults.
“Business is not all about good news,” he says frankly. “I think sometimes you have to be stern and tell somebody when something isn’t working and when they’ve made a mistake because we’re not dealing with theoretical money here � we’re dealing with real money.
“There’s a phrase, you may have to be cruel to be kind, and sometimes in business people find it difficult to say no. As an investor, I truly believe I have a responsibility to the people I invest in to be straight with them and give them the bad news as w
l as the good, because otherwise they’ll never learn.”
James, recently a Resident Entrepreneur Mentor for MBA students at London Business School, continues: “You’ve got to inspire them, motivate them, keep them really believing in what they’re doing, because you want them to be successful. At the same time, you want them to be realistic; the one thing that viewers constantly see is people walk in with delusions of grandeur about what they think they’re going to do, but reality sometimes is different.
“I think the biggest lesson I’ve learnt is that in business anything that could go wrong generally does; the test of a good entrepreneur is how they deal with that.”
Dragons’ Den BBC Two – Tuesday 16th October 2007
Related Links: Dragons Reveal Secret To Success In New Book