The heat is on: CBJ’s Sara Kopamees lunches with the dragons
The interview begins with a lot of chuckling because I have just been told that Kevin has to leave our lunch interview early, at 12:15. Not for a nail-biting deal meeting, or a conference call, but for a squash game.
It’s not true (that Kevin has a squash game), but it’s what Arlene says—demonstrating the widely recognized, sometimes goofy dynamic between the Dragons when they’re in the same room. They joke, they jab and they judge. Fortunately for me, I was privy to some of their banter when I spent some one-on-one time with them the day before the first episode of Season 5 of CBC’s Dragons’ Den went back on the air.
On September 21st, I met with Arlene Dickinson (her first interview with me appeared last February in CBJ), Robert Herjavec, and Kevin O’Leary at Bymark, a restaurant in Toronto. Was I afraid, you ask, to be sitting in a room with these Dragons, especially the notoriously naughty O’Leary? The short answer is yes, but that quickly faded as we really got into the nitty-gritty of what these Dragons are all about in business, life and the show. Surprisingly, they told me that it’s not always just about the money (it just is most of the time).
Sara Kopamees: What is the most exciting aspect of this new season of Dragons’ Den?
Kevin O’Leary: I think it is the fact that a three million dollar deal got done. It shows you how advanced the platform [of the show] has become, because I think companies are now coming on for two reasons: one, they know the value of free advertising, which has been the people watching Dragons’ Den (and you can launch a product or service and get distribution as a result), and secondly, banks aren’t lending to small businesses as much as they used to, and they’re looking for capital where they can get it.
Our role has become not just investors: we’ll do deals where we lend money. We’ll be opportunistic like any investor would. That’s why you end up with deals this size. Over $20 million got invested this year. That’s huge.
Arlene Dickinson: I also think that on the show this year you’ll find that the five of us have really found our space. We’ve always had good chemistry between us, but this year there’s been a lot more clarity around what we each look for and why we look for it, and we are much more opinionated about what we like and what we don’t.
Robert Herjavec: I think you see characters come out that you didn’t see before. You’ll see people invest more money than they ever have in the past (and it will surprise you who), and I think people don’t get along sometimes more, and sometimes they do.
AD: Kevin and I had a love-hate relationship this year… he loved me and I hated him.
SK: We talk to business owners about confidence and image when approaching investors. Can you talk about image and how important it is for prospective entrepreneurs?
KO: I think the number one rule is, when you’re talking about money, wear a tie! I find that it’s just the fact that capital’s hard to make, and hard to keep. So one of the things I look for is if you come dressed as bozo the clown, and you ask for a million dollars, I think it’s bozo the clown! I don’t want to give bozo a million dollars.
My thing is, I’m not a bad guy, I just tell the truth. There’s no grey in money, you either make it or you lose it, and there’s no point in encouraging people that have fictitious dreams that aren’t ever going to come to fruition, particularly when they’re spending their own family’s money. It is a crime to prey off your own family who don’t have the ability to say no to you for some reason and then suck them dry of all their savings, which we see over and over and over again. I just try to be the voice of reason in a situation like that.
RH: Sara, I think you’ve got maybe 30 seconds to make a first impression, everything beyond that either goes to that or away from that. I call it a humble arrogance. You’ve got to be confident, but you can’t be so confident that you piss us off. Nobody likes arrogant people.
AD: I think that your point about how you appear is a valid one. I’m in the marketing business and I always say to people I never really understood branding until I became a brand.
RH: That is so true.
AD: And I can tell you that how you approach yourself and deal with yourself properly is extremely important.
SK: What type of advice should a new entrepreneur get? What type of advice would you give to a new entrepreneur?
KO: Step one is: who do you get the advice from?
RH: To Kevin’s point: when I was starting a business I went to my dad and I said ‘I have some questions about starting a business’, and my dad said, ‘let’s go see Bob who has more seniority in the union than I do’. Go to an expert. Don’t go to your family; don’t go to your friends, because they’re going to lie to you. They don’t mean to lie to you, but they want to help you. You need cold, hard, facts. And in that way, I agree with Kevin. That’s the greatest thing about the show, we’re not your friends, we’re not your family, and we’re going to tell you the truth.
AD: We’re going to tell you the truth as we see it. Which means that we’re not characterizing a right and a wrong in the business. There are right fundamentals in business, absolutely, there are also wrong things you can do, but in terms of whether your idea is the best idea, there are some grey areas around that. So you have to believe in yourself.
RH: And even if we poop on you, it’s okay to keep going.
KO: It’s a fundamental issue: if you can’t articulate the idea or the opportunity in two minutes, that’s a huge failure because how’s anybody else supposed to figure it out when you’re trying to sell the product or service?
AD: Or your employees—how are they going to follow you when they can’t understand it?
SK: So communication is critical, then.
RH: It’s also how you dress, how you stand, the subtle communication.
KO: If you look at the content over the last five years, the people who have gotten investments and the people who didn’t, the commonality is the ability to articulate the opportunity in a very short period of time, and communicate your ability to execute it. If you’re not able to do that, the propensity to get funded goes way down.
SK: What about your own personal experiences and influences? How have these influenced you on the show and in your own growth in business management?
KO: Every one of us comes from a different place in terms of our sectors. But there are some commonalities in entrepreneurs—the ability to fail, pick yourself up, do it again, the ability to understand what’s working and what isn’t, the ability to make tough decisions. I mean, if you have to fire your mother to keep your business, you fire your mother. It’s that simple. Sometimes you can see those weaknesses in people and you realize, if you invest in that person, they won’t have the strength to make the right decision when the time comes, because they don’t understand what really matters. And in a business, no one person is more important than the business, because the business employs multiple people.
RH: I think we’re a product of everything that’s happened to us. Me sitting here right now is a sum of all my life experiences. You see that on the show. People often say ‘you’re the nice guy on the show, Kevin’s the mean guy’, but I can name you times on the show when Kevin’s the nice guy and I’m the mean guy.
The thing that really pisses me off is when people come on the show and complain. You know, I’m the immigrant to this country and just like everybody we’ve all had hardship. I hate when people complain and come on the show and tell me how hard their life is. It’s like Kevin says: every failure is another step to success.
AD: One of the secrets of the show is that we do come at it with different perspectives, different experiences from our industry, strengths. We look at these things and I might see something that Kevin doesn’t. Robert will see something that none of us sees. Isn’t that the great part of the show? Isn’t that what makes it entertaining? Isn’t that why the show works?
RH: You get five people with completely different life experiences, all successful, forget the money. For the average business guy just to get in front of us like that is something that I would have died for—to get in front of five people to give me their opinion.
SK: Robert, this one is for you particularly. What’s your best advice for new Canadians looking to get into business?
RH: Buy my book (chuckle). No, but really. Business is not scary, it’s inclusive. Anybody can do it. Business isn’t always about being on Bay Street and doing an IPO and fancy dividends and all these terms. Sometimes, business is just about providing a great living for your family. For me, there’s nothing wrong with that. Kevin’s big shtick is ‘how am I ever going to make money from this?’ but the fact is, an immigrant can come here and start a business and make a living for his family, and what’s wrong with that?
KO: I’m going to start crying, I’m so moved. You never get your money out of it, that’s what’s wrong with it.
SK: But maybe that’s why it’s not appropriate for the show.
KO: Well, investors put money in harm’s way so they get a return on it. If you never get your money back, that’s a bad outcome. So I don’t get involved in the emotions of a business, I don’t care if a family works there. What I want to know is what’s in it for me, for myself and my shareholders? That’s all that matters. The rest is irrelevant.
RH: One of the biggest fallacies I hear from immigrants is, ‘it’s not what you know it’s who you know.’ You have to get into a business where the value you add is real, because you don’t know anybody when you come to this country.
AD: Yes, and quite frankly, you want people to want to know you. The point isn’t about you wanting to know other people, it’s that you get to a place where people say ‘I really need to get close to that person because they’re doing something interesting and dynamic and innovative, and they’re leaders.’
Leaders don’t just happen, you become a leader. If you can’t have an opinion on something as simple as Twitter that makes people want to follow you, then why would they follow you in business or real life?
RH: You have to take responsibility of yourself. The biggest lies you tell in business are the ones you tell yourself.
Forget who you don’t know, become somebody who has something significant to say and others will find you. One day maybe you’ll build a business a guy like Kevin will want to invest in.
AD: If you want someone like Kevin to invest in your business— (Kevin interrupts)
KO: I’m not trying to make friends I’m just trying to make more money…that’s what business is about. It’s not a friendship club. At the end of the day, it’s risk capital, it’s where it gets deployed, and it goes to where it’s highest return, lowest risk. Money doesn’t really care if it goes to a nice guy, who cares?
AD: I disagree with you, Kevin, on that statement. I think if you have an investor who cares about you, not as a friend, but has a vested interested personally with you, it’s human nature to do better when people are supporting you rather then when they’re just sitting as passive money. Money with intention is better than just money. I believe that.
KO: I think that’s completely irrelevant and I couldn’t care less.
RH: You see? That’s why the show works. Everybody has an opinion!
AD: Yes, we all think we’re right.
SK: What’s the one thing that continues to surprise you about the people that come on the show?
KO: I think it’s the great stupidity of the people who come on the show. People ask for millions of dollars for an idea that they dreamt up in the morning.
RH: I think it’s the lightning affect. Five seasons now and it never ceases to amaze me that people think the path to success is to wake up, get hit by lightning with that one-in-a-billion idea and boom! That’s it.
AD: The thing that continues to surprise me is the people that come on [the show] with a solution to a problem that only they have, that the market doesn’t give a shit about. But because it solved a problem for them…so the world should need it? It’s so stupid.
SK: When is it the hardest to turn people down?
KO: It’s not hard at all; you’re never going to see them again. It’s that easy.
RH: Well, you might see them in a dark alley one day.
KO: They’re sitting there crying about how they used all their family’s money. They were never pragmatic about their idea and they never tested the market, sitting there saying “give me money because I failed my first time.” Well, 15 minutes later we’re talking to a brilliant entrepreneur with a new idea and that person that was crying is not even a memory.
RH: Well, you should never turn the person down; you should turn the idea down. This is what really pisses me off about the other Dragons sometimes. No names mentioned. Kevin. People come on and we kill their spirit. It’s okay to say your idea is bad, but why can’t that person leave feeling better than when they came in?
O: If they can’t take the heat, tough. That should give them the [nerve] to go in front of the next investor and say, ‘I won’t do what I did in front of O’Leary, because that didn’t work.’
RH: Ugh! Really, come on. Somebody, somewhere in life someone believed in you. Why can’t you say the same message in a different way?
KO: Listen, the only reason people gave me money is they thought they could make more.
AD: Yes, but you have forgotten where you came from. You are arrogant about it.
KO: But you’re saying money has a soul and a feeling, but it doesn’t.
AD: No, but money is attached to a person.
KO: Yeah, but I’m not there to be a coach or make friends or provide an uplifting experience. I’m just trying to make money.
AD: Yeah, but you believe that your truth is the only truth. And I’ve got news for you, it’s not. You’re not an expert in every industry and you’re not an expert in human nature.
KO: But I’m good enough to make money and that’s all that counts.
AD: But after you’re done with them, they’re destroyed. After we’re done with them….
KO: They’ve learned that life is hard and then you die.
AD: Awww, did you get locked in a room when you were a kid?
KO: The bottom line is you’re wasting words.
RH: Sara, this is why the show works. People who were watching the show might think ‘Oh my God, after the show, they must not talk.’ But I respect Kevin, his ability to make money and his opinion. So even if I don’t agree with him in the moment, I respect him as a person. Same with Arlene, I’m okay with arguing with her now, but still talk to her the next day.
SK: Kevin, do you make people nervous in the grocery store?
KO: No! I want you to call me what I really am: Mr. Wonderful.
Because if all you do is tell the truth then you never have to remember what you said. So I say the same thing in the grocery store. The point is I don’t try to embellish a ‘no’. A no is a no. I ask: is that tomato a good tomato? Yes or no? That’s why I’m Mister Wonderful.
[Editor’s note: After watching the first episode, we learn where Kevin’s moniker “Mr. Wonderful” comes from.]
RH: You’re so humble.
SK: Next question then: what gets your blood going on the show? For instance, Arlene, maybe it’s a new marketing idea or service?
AD: One idea that got my blood going in the wrong way was a marketing tool. It was putting forward false hope to people by saying that marketing is as simple as a design concept, as opposed to marketing as being complex and integral to business. I was so mad. I love the ideas of things like that but I hate when people are coming on and saying ‘this is real’ and it’s not.
SK: What then are your realistic hopes for the possibilities of social networking as a tool for business?
RH: Sara, it’s the real deal.
AD: Let me ask you a question. If you were going to go to a movie, and you looked up Roger and Ebert’s site and they gave it two thumbs up, and then you went on Twitter and said to your Twitter world, ‘I’m thinking of going to a movie’, and everyone said ‘Oh my God, do not see that movie.’ Who would you trust?
SK: I’m inclined to go with the experts.
AD: Well, now, most of the world would say ‘I trust my friends’.
RH: Well, most of the world is changing to that. Last month in North America there were 65 million Twitter messages out. This is from a media that didn’t exist three years ago. Also, one trillion hours were spent on Facebook last month.
AD: Email is dying, because you can shorthand your conversations. The problem with that is that you can shorthand them to the point where your conversations don’t have meaning.
KO: There’s one industry [social media] hasn’t worked for worldwide, and it’s financial services because of compliance issues.
But at the end of the day, there’s only one metric that matters, and that is how do you monetize it. I’ve seen a thousand deals and I wonder, okay, two years from now, how do I make money? That’s where most of these business plans fall down.
AD: The technologies are moving so fast that the old metrics of measuring whether you’re going to make money are dead.
KO: Yes. You can count on your hand the number of social networking sites that have created value for shareholders.
RH: But we don’t know the answer for this yet.
SK: Ok. Let’s play the finish the sentence game. The best thing about starting a business in Canada is…
KO: Less competition.
RH: The self-satisfaction of accomplishing something.
AD: I think that the best thing about doing business in Canada is doing business in Canada. We’re doing it here.
SK: Is there a difference in how Canadian and American entrepreneurs approach things? Maybe trends you’ve noticed on your U.S. show [Shark Tank]?
KO: The markets are ten times bigger and the deals tend to be larger with far more competition. There is far more complexity, just because it’s a much, much bigger market.
RH: I find that people are used to failure more because of more competition. They tend to be okay with getting beat up, and then getting back up.
SK: What’s the hardest thing to be doing if you’re an entrepreneur in each industry?
AD: In my business, it’s trying to understand what’s going to get commoditized. Figuring out how not to get disenfranchised and how not to be disintermediated.
RH: In mine, it’s finding a niche way to add value in technology when there are the unwashed masses telling your customers they can do the same thing…
AD: …for cheap, for less.
KO: Financial services is about scale now. The big challenge for any start-up is compliance. If you’re trying to work with the Canadian banks, for example, they’ve raised the bar so high that the cost of compliance is too expensive.
RH: But it’s interesting Sara, because the biggest opportunity in my business is the biggest obstacle for Kevin. So what’s driving technology right now is compliance. Doesn’t it show you that every obstacle creates an opportunity for another business?
AD: It’s true. Especially for marketing: everybody can dismiss it and say it’s a trivial pursuit, but in fact it’s integral and is connected to business, so none of this matters if there’s no market for [your idea] to happen. None of it matters unless there’s a business or a consumer buying it. The understanding that marketing is a lever that needs to be pulled at the right times is getting more and more critical than before as media gets fragmented and as things change.
[At this point, Kevin leaves for his imaginary squash game. The group shakes hands and takes a jab at Kevin’s bright yellow tie.]
SK: Final questions for you both. How can each of your businesses be a model for start-ups?
RH: The fact that my business has survived is a model. The key to starting a business is survival. People often ask me: how do you measure success? Another Lamborghini? A big house? And what I say to people is that sometimes the measure of success is simply surviving. I don’t think there’s anything wrong with that. You may not start a business and end up with two Lamborghinis in your garage, but you may end up with a business that simply feeds your family and provides a good living. And if you love what you do there is absolutely nothing wrong with that. That’s what I love about starting a business. And that’s what I say to my kids: if you start a business and you feel powerful, and good and…
AD: …in control of your life?
AD: I always get asked: what drives you? I say success. Success means I have satisfied my need to do whatever I’m trying to do, and I’ve done it as well as I could. The number one question I ask entrepreneurs is: what does success look like to you? You would be surprised how few can answer it.
RH: I’ve never been money driven. I’ve always been success driven.
AD: Money’s always just been an outcome.
RH: [Success] is a feeling of accomplishment.
AD: I come home every day and just say ‘Aren’t I lucky?’ If you forget where you come from you will never be able to empathize with those people who just need a hand.
SK: Final topic. If you could sit down for dinner once, with one person past or present who has influenced you, who would that person be?
AD: I would say my dad. He influenced me the most, and I think he would give me the best advice.
[Another long pause. As Robert looks down, Arlene embraces him as it’s clear he’s having a difficult moment. Robert’s voice breaks when he says:]
RH: My mom. I miss my mom. You know she knew nothing about business, but she believed in me.
AD: I would say that about my dad.
RH: And isn’t that the reason I’m successful? Because I had people who believed in me.
AD: That’s what my dad always said, ‘Arlene your free will is all you have, if you let other people decide for you, you will not live the life you want.’
SK: Well said. Any final thoughts for our readers, and those watching Dragons’ Den this season? What can you say about Canada and doing business and, in turn, the Canadian entrepreneurs appearing on the show?
AD: Robert and I have traveled the globe and this is the best place to do business. Period.
RH: I think this season is going to be the best season ever. Everything that people like about the show is bigger and better.
AD: I think that this year, the best learning of the show is about human nature. I think if our audience really views it, they’ll learn a lot.