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Speaking to DS, the Dragons' Den judge shares his tips for budding inventors hoping to make a good impression and secure an investment.
Could you tell us a bit about your business background?
"I came into business in a pretty ordinary way - I studied economics and maths at university, became an investment banker when I graduated. I was running a hedge fund, quite a powerful hedge fund in the early '90s, I took early retirement when I was 34, moved to Monaco, and then became gradually more interested in business, began to back them with my own money as a business angel. Since then, I've done over 50 startups that I backed. About 15 have gone to market, some have floated on the stock exchange, some have been acquired. I've had a pretty good record since I started doing that."
What is it about business? Do you get a buzz from the whole concept of it?
"You get a real buzz, you have to enjoy your work otherwise you're no good at it. Some people have racehorses, I have businesses - and they're a lot more fun - because you've got people doing all sorts of things and you have your struggles, but you have your fun and wins as well. It's a passion."
Moving onto Dragon's Den, you're one of the new Dragons. What dynamic do you think you bring to the Den?
"Probably the most analytical, 'cos that's my academic background, I'm an international chess player. I approach business in a very analytical way. I put a book out last year called 'Taming The Lion' which has gone very very well, about all my theories on how I invest. I have quite a structured way of thinking.. I'm a bit more structured, less seat of the pants than the others - not to take anything away from them, they've got this great intuition that guides them, whereas I tend to take things apart and look for reasons why things might or might not work. I guess I'm also a little bit softer than the other guys, they call me the nice Dragon. I tend to want to relax a person and find out about them, which is what I do when I invest in someone. Sometimes I deliberately go a little bit easy on them, to find out what they're thinking rather than scaring them."
What are you looking for in an idea when it's pitched at you?
"It's probably two things. Something which is called disruptive, a brand new product or idea. I'm not interested in making toothbrushes and just making them slightly better than the rest of the world. I want something completely different, where we won't have any competitors, we'll create a brand new market and sink or swim on our own efforts. I tend to shy away from very competitive areas. I'm looking for someone who's come up with a brand new idea or way of doing something. That's the first point. It really is the person standing in fronf of me. A great business can be messed up with the wrong person - but the right person can make all sorts of things happen. I mean their integrity, ambition, intelligence, how nice they are, how they are to work with other people, what track record they've had. I often compare assessing the person to a first date. In the first five minutes you've got an idea of whether you like the person, trust them... it's like going on a date, first impressions are often well and truly right. I like to relax, get to know the person."
After the whole pitching process has happened, how much involvement will you have in ideas you invest in?
"Generally, you know, I invest in so many things - ranging from garden lines to airlines to private members' clubs like Home House in London, to technology companies - I don't pretend to have expertise in all those sectors. I always expect the person doing it to know a lot more about it than I do. I listen, and just try to make sure they've got the right strategy. Business strategy is pretty common despite what the business. So, I can help them in a big picture sense. I often think of it as the entrepeneur as the player, and I'm like the coach. I may not be a great player myself, but I can spot mistakes and help them out when they need it."
You said just then you sometimes don't have expertise in a certain field. How much impact does you not having expertise in that field have on you assessing the idea?
"It's never been a real problem, actually. Most of the time, a businessperson should be able to simplify as well as complicate. They should be able to explain it to me in a way I can understand. If they can't simplify something enough that I can understand, then there's probably something wrong with their approach. More often than not, the things I'm interested in are common from business to business - like how are you giong to expand the business, how are you going to market it, how are you going to hire people, how are you going to raise more money if we need more money? Those questions are very common, so the understanding specifically of how their product works doesn't matter too much as long as someone's done it the right way, as long as there is a true invention, I don't need to understand how it works, as long as it does work."
It could be the case that someone has a great idea, but their presentation to the Dragons is awful. Can you look beyond that if you like the idea? Does the idea ever sway you?
"That's where I'm probably different to the other Dragons. I'm not too worried about their presentation - I'm trying to look beyond their presentation. If they look nervous, if they make mistakes, I don't care, I think it's completely natural. Sometimes I think you could have Albert Einstein on there trying to explain his theories and he wouldn't have a clue about business margins or anything like that. The other Dragons like them to know that stuff, but I don't expect the guy in front of me to be an accountant or a presenter. I can do that for them, or easily get someone in to sort those details out. I'm looking beyond it to see how good the business plan is, and to see what integrity the guy has. If he stuffs up some accounting term, I couldn't care less. That's where I'm different. I'm trying to support him, I might take a bit more time to get to the bottom of it, just by trying to help him a little bit."
You started off the show saying you hope you've found the next big thing over the course of the series. Do you think you did?
"You never know. I've got a couple of potentials in there. It's actually quite exciting, some of the things I invest in. You never know. It could takes five years to find out. Everything's at an early stage, you have to develop it, find out what competition's out there, whether the market likes it. It takes time. So that's a question for one or two years away at least."
Are there any particular bad ideas that spring to your mind from the series?
"A whole bunch. I think that's one of the great things about the show. So many people have entertained ideas of starting this business or that business. It does bring you back to earth a little bit - some of the questions on the show reveal the weaknesses. I don't think I could say now, but I think you'll see plenty of bad ones on the show. It's quite an educational programme in that way."
Has there been any idea you've turned down and come away from it afterwards and thought 'why did that happen?'
"There were one or two where probably I got beaten by the other Dragons in terms of negotation, and you wonder afterward 'maybe that was actually quite special, maybe I should have pushed more, been a bit more aggressive or generous with my offer'. There have been a few like that - it does happen. In the heat of the battle everyone thinks the pressure's on the entrepeneur, but there's also a little bit of pressure on the Dragons. It's your own money, so that focuses you, and you have to make quite a quick decision, within twenty minutes, to decide if you're going to invest a good chunk of money. Sometimes you do make mistakes, and come away thinking 'that's a good idea, I should have been more generous in my offer'. That definitely happened."
Thanks for chatting, Richard!
Dragons' Den airs Thursdays at 8pm on BBC Two
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